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22 Apr 2014
ECB easing hopes bolstering financial conditions - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, notes the hopes of further ECB easing is benefiting the financial conditions in the bloc.
Key Quotes
"The hope of further monetary easing by the ECB, whether it is negative interest rates on deposits held at the ECB or outright QE, continues to help financial market conditions in the euro-zone. The strong investor confidence is evident by the levels of yield now on offer in troubled periphery countries."
"The Irish 10-year yield is now a mere 13bps over the 10-year US Treasury bond. The optimism has helped support the euro with capital inflows revealing strong inflows into equities, which have been helped by the contraction in periphery yield spreads."
"The FT today highlights the strong inflows into periphery debt markets as well. Given where bond prices have risen to, we maintain that there can’t be much left in terms of value and hence those supportive inflows are likely to slowly fade. Like with USD/JPY above, while action from the ECB is important in eventually pushing the euro lower, a key element will be stronger US economic growth that undermines the forward guidance of the Federal Reserve."
Key Quotes
"The hope of further monetary easing by the ECB, whether it is negative interest rates on deposits held at the ECB or outright QE, continues to help financial market conditions in the euro-zone. The strong investor confidence is evident by the levels of yield now on offer in troubled periphery countries."
"The Irish 10-year yield is now a mere 13bps over the 10-year US Treasury bond. The optimism has helped support the euro with capital inflows revealing strong inflows into equities, which have been helped by the contraction in periphery yield spreads."
"The FT today highlights the strong inflows into periphery debt markets as well. Given where bond prices have risen to, we maintain that there can’t be much left in terms of value and hence those supportive inflows are likely to slowly fade. Like with USD/JPY above, while action from the ECB is important in eventually pushing the euro lower, a key element will be stronger US economic growth that undermines the forward guidance of the Federal Reserve."