What’s Your Next Move Mr. Draghi? Investors Try to Interpret ECB

Publikuota: 2015-12-30
Ralpho Orlowskio (Scanpix / Reuters) nuotr.
Ralpho Orlowskio (Scanpix / Reuters) nuotr.
 

If this year was about reading Mario Draghi’s lips, 2016 will be about reading his mind.

German 10-year bonds are headed for their first monthly decline since August after the European Central Bank chief suggested that officials may have injected enough money into the euro region’s economy to reach their desired inflation rate of just

under 2 percent. It marked a change of tone from Nov. 20, when he sent yields on shorter-dated notes to all-time lows by saying the institution would take any necessary action to lift consumer prices.

The clarity of Draghi’s words has given way to a less transparent picture for investors trying to divine the ECB’s next move. A market rally driven by its bond-buying program, or quantitative easing, came to an abrupt halt this month after Draghi

unveiled a package of measures that suggested to some people he was facing resistance within the central bank for additional stimulus.

“With the last decision it was very clear to me that the hawks took over the steering wheel,” said Elwin de Groot, a senior market economist at Rabobank International in the Dutch city of Utrecht. “That could be the real story for 2016: not only how

willing is the ECB to do more but also are they still able to?”

Bund Yields

While Draghi has said the ECB remains ready to respond to changing circumstances, forecasts for the bond market reflect an uncertain outlook. Predictions for the benchmark German 10-year bund yield for next year range from 0.4 percent to 1.55

percent.It was 0.64 percent on Wednesday.

The start of QE in March pushed the average yield on euro- area sovereign debt to a record low of 0.43 percent, only for it to surge to as high as 1.08 percent by the middle of June, according to indexes developed by Bank of America Merrill Lynch.

Market turmoil in China and collapsing commodity prices then reignited fears of deflation, boosting demand for the fixed-coupon payments on bonds and pushing the average yield down to 0.57 percent by Dec. 2. A day later, it jumped to 0.73 percent

as German yields surged the most since 2011 because the ECB confined its latest stimulus efforts to a cut in its deposit rate and an extension of QE by at least six months.

Policy Driven

Even after that setback, euro-area government bonds have eked out a 1.6 percent return this year through Tuesday, adding to a gain of 13 percent in 2014. They outperformed U.S. peers, which made 0.7 percent as the Federal Reserve raised interest

rates for the first time since 2006 and signaled more to come in 2016.

“This so-called policy divergence will be the topic of the next year,” said Marius Daheim, a senior rates strategist at Swedish bank SEB AB in Frankfurt. “The markets will continue to be policy driven.”

He recommended investors favor the euro region’s higher- yielding bonds, including those of Italy and Spain, for positive returns.

“The pressure will be on the ECB to do something,” said Kit Juckes, a London-based global strategist at Societe Generale SA.

For Draghi, “it’s more a question of adjustments to the tiller to keep the boat sailing in this direction but not get buffeted by other events. He’s reactive.”

Rašyti komentarą

Rašyti komentarą

Gauk nemokamą VERSLO naujienlaiškį į savo el.pašto dėžutę:

Pasirinkite Jus dominančius NEMOKAMUS savaitraščius:















Svarbiausios dienos naujienos trumpai:



 
Stocks Mixed as Trade Worries Return; Yen Jumps: Markets Wrap

A drop in Japanese shares dominated an otherwise mixed session for Asian equities, as the yen extended gains...

2018.05.24
Stocks in Asia Slide, Yen Gains as Risks Pile Up: Markets Wrap

Japanese shares led most Asian stocks lower and the yen appreciated as investors eyed risks from Turkey to...

Rinkos
2018.05.23
Asian Stocks Edge Lower, Oil Hovers Near 2014 High: Markets Wrap

Most Asian stocks dipped in a holiday-hit trading session Tuesday, with the dollar and U.S. Treasuries little...

2018.05.22
Dollar Rises With U.S. Yields; Asia Stocks Drift: Markets Wrap

Most Asian stocks gained Monday as U.S. equity futures jumped in the wake of news that the Sino-American...

2018.05.21
Asian Stocks Mixed; U.S. 10-Year Yield Near Highs: Markets Wrap

Asian shares traded mixed on Friday, while remaining on track for a weekly loss as investors mull the...

2018.05.18
Asia Stocks Drift; U.S. 10-Year Yield Through 3.1%: Markets Wrap

Stocks in Asia drifted as Treasury yields climbed above 3.1 percent, raising concerns about the appetite for...

2018.05.17
Asian Stocks Slip With Treasury Yields Above 3%: Markets Wrap

Most stocks in Asia followed their American counterparts lower as geopolitical developments and rising...

2018.05.16
Asian Stocks Drop; Dollar Gains as Yields Above 3%: Markets Wrap

Stocks in Asia declined Tuesday, while the dollar strengthened and 10-year Treasury yields rose back above...

2018.05.15
Asia Stocks Rise After Recent Rally; Yields Slip: Markets Wrap

Stocks rose in most Asian markets, extending the biggest weekly advance since February. The ringgit performed...

2018.05.14
Asian Stocks Head for the Best Week Since February: Markets Wrap

Asian stocks rallied after their U.S. counterparts gained amid relief the latest reading on American...

2018.05.11
Dollar Rally Rolls On as Oil Rebounds, Bonds Fall: Markets Wrap

The dollar rallied a fourth day, roiling emerging-markets and complicating the picture for commodities as...

Rinkos
2018.05.09
Stocks in Asia Rise as Dollar Fluctuates; Oil Dips: Markets Wrap

Asian stocks climbed Tuesday, extending a gradual recovery after declines in recent weeks stoked by concerns...

Rinkos
2018.05.08
Asia Stocks Drop as Trade Talks Held; Dollar Slips: Markets Wrap

Asian stocks declined as investors assessed the implications of ongoing trade talks between the U.S. and...

2018.05.04
Stocks in Asia Retreat After Fed; Dollar Declines: Markets Wrap

Stocks in Asia declined and European futures signaled a lower open after the Federal Reserve said inflation...

Rinkos
2018.05.03

Verslo žinių pasiūlymai

Siekdami pagerinti Jūsų naršymo kokybę, statistiniais ir rinkodaros tikslais šioje svetainėje naudojame slapukus (angl. „cookies“), kuriuos galite bet kada atšaukti.
Sutinku Plačiau