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ECB sticks to its guns

Published Thursday, April 16th, 2015

It was full steam ahead for risk assets yesterday as confirmation of a Chinese economic slowdown and ensuing hopes of further policy easing pushed global equity indices to just shy of record peaks. Investor sentiment was also underpinned by evidence that the ECB’s unprecedented stimulus measures were contributing to an uptick in inflation across the bloc. German consumer prices were seen rising 0.5% in March while equivalent data from France pointed to a steadying of prices after having suffered back-to-back monthly declines. Moreover, the fallout from the softening of the single-currency continued to offer improving growth prospects for the region after figures revealed the euro-area’s trade surplus rose sharply in February following a 4% surge in exports on the month.

Mario Draghi did his best to bolster the risk-on mood after quashing rumours that the ECB may limit the magnitude of its bond-buying programme and reiterated its pledge to gradually inject over €1 trillion into the area’s economy. Eurozone bond yields, already at close to historic lows, rallied further with the 10-year Bund dipping to a nadir of 0.10% and looks certain to follow its Swiss counterpart into negative territory. However, another less encouraging reason behind the rush into highly-rated sovereigns may possibly be the return of Greek debt anxieties.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.