• 17 hours Hawkish Fed Sends Gold Prices Crashing
  • 2 days Bezos Is Heading To Space This Sunday
  • 5 days El Salvador’s Surprise Bitcoin Move
  • 8 days Markets Unfazed As Inflation Hits 13-Year High
  • 9 days How the Token Economy is Disrupting Financial Markets
  • 11 days FBI Investigating 100 Types Of Ransomware Attacks
  • 13 days Fed Ends Corporate Credit Emergency Lending Program
  • 15 days AMC Becomes the Latest Winning Meme Stock After GameStop
  • 16 days The Real Reason Your 401k Has Been Lagging
  • 17 days China Lifts Cap On Births, Allows Three Children Per Couple
  • 19 days The Market Is Ripe For Another GameStop Saga
  • 22 days Senate Grills Big Banks Over Pandemic Opportunism
  • 23 days Cannabis Has A Major Cash Problem
  • 24 days Ransomware Netted Criminals $350M In 2020 Alone
  • 25 days Russia Is Taking On Google
  • 26 days Chinese Regulators Deal Another Big Blow To Bitcoin
  • 27 days Ohio Residents Brave Vaccine for Chance To Win $1M
  • 29 days Inflation Is Coming. Are You Prepared?
  • 30 days Travel Might Get Another Supersonic Disruption
  • 31 days The World Is Running Out Of 6 Key Resources
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

  1. Home
  2. Markets
  3. Other

Dollar Sinks, Bonds Sink as ECB's Rate Cut to -0.3% and Pledge of More QE Until March 2017 'or Beyond' Not Dovish Enough

ECB president Mario Draghi's announcement today regarding more QE fell far short of the sky-high expectations of market participants.


Draghi Recap

  1. ECB would continue its ?60bn-a-month bond buying program for another 6 months until March 2017 "or beyond".
  2. ECB reduced key interest rate to a historic low of minus 0.3 percent.
  3. ECB pledged to buy more assets with the proceeds of its existing bond purchases.
  4. ECB announced it would buy municipal bonds in addition to standard government debt.


Japanesque Announcement Not Enough

Somehow that was not enough to excite the market. Here's an amusing quote courtesy of the Financial Times.

"The ECB delivered at the very low end of expectations," said Andrew Balls, chief officer for fixed income at Pimco. "There wasn't much to get excited about?.?.?.?markets were expecting an increase in the monthly purchase size."

Further negative interest rates were "nothing to get excited about". Apparently the only thing that would have satisfied Balls would have been an announcement the ECB would purchase still more European public debt securities.

Why not just buy them all and get it over with? Japan is effectively there right now.


Market Response

  • Index of Europe's 300 largest listed companies dropped 2.9%
  • Germany's DAX fell 3.0%
  • France's CAC 40 lost 3.2%
  • UK's FTSE 100 dipped 1.9%
  • US S&P 500 down 1.1% (market still open)
  • US DOW down 1.0% (market still open)


US Dollar 15-Minute Chart

US Dollar 15-Minute Chart

After surging yesterday to a high last seen in March of 2003, the dollar index pluinged 2% over the course of four hours today.


US 10-Year Treasury Yield 15-Minute Chart

US 10-Year Treasury Yield 15-Minute Chart


More, More, More

The markets are clearly hooked on easing, always demanding more, more, and more. Japanesque announcements are simply not enough, nor are below zero interest rates to the tune of -0.3 percent.

Good luck with that.

 

Back to homepage

Leave a comment

Leave a comment