• 1 day The Shroom Boom Is Here To Stay
  • 2 days Biden Will Be A Boon For Solar Stocks
  • 4 days The Gold Rally Has Finally Run Out Of Steam
  • 4 days Citibank Analyst Predicts $300k Bitcoin By End Of 2021
  • 7 days Bitcoin Lives Up To Its Safe Haven Status In A Big Way
  • 7 days 14 Million People Will Lose Unemployment Benefits On December 31st
  • 9 days Why 12 Million American Millionaires Isn’t Good News
  • 10 days Big Oil Is Paying The Price For Investing In Renewables
  • 11 days The Banking Industry’s $35 Billion Gravy Train Could Disappear
  • 12 days Did Amazon Just Democratize Prescription Drugs?
  • 14 days The Private Space Race Just Got Very Real
  • 15 days Short Sellers Are Willing Big In This Turbulent Market
  • 17 days SpaceX Gets Go-Ahead To Send Humans Into Space
  • 17 days Saudi Arabia Lost $27 Billion In Oil Crash
  • 18 days China’s Big Tech Takes A Hit As Regulators Crack Down
  • 19 days Black Friday Could Be Retailers’ Only Hope
  • 20 days Why You Should Not Dump Your Stay At Home Stocks Just Yet
  • 21 days The Real Reason Why Uber And Lyft Stocks Have Soared Nearly 50%
  • 23 days Bitcoin Heads Towards $16,000 And No One’s Cashing In
  • 24 days Elon Musk’s $250 Tesla Tequila Is Already Sold Out
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…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  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