Australia · Bonds · Central Banks · China · Commodities · Commodities Volatility · Credit · CSPP Corp Sector Purchase Prog. · Currencies · ECB · Econochat · Economic Outlook · Economics · EUR · Europe · Eurozone · Inflation · Interest Rates · Market News of the day · Markets Data · Monetary Expansion · North America · NPL´s · OIL · Rates · Risk · USD

Markets Commentary

Euro, Bund Yields Spike As Draghi Does Not Reveal Any New Bazookas

European Central Bank President Mario Draghi brushed off German criticism of his ultra-loose monetary policy on Thursday and vowed to use all the tools at his disposal for “as long as needed”.

He said the ECB’s policy was working, which helped boost the euro.

Draghi said the independence of the Frankfurt-based ECB was anchored in the EU treaty.

“We obey the law, not the politicians, because we are independent as stated by the law.”

The comments came after German Finance Minister Wolfgang Schaeuble sharply attacked ECB policies, arguing they were causing “extraordinary” problems for Germany and were in part to blame for the rise of the right-wing anti-immigration Alternative for Germany (AfD).

Draghi repeatedly stressed that inflation remained far off the bank’s target of near two percent and argued that the euro zone economy still faced a cocktail of external risks and would be in a worse state today had the ECB not resorted to negative interest rates to accompany a 1.7 trillion euro ($1.92 billion) money-printing scheme.

He said the bank would begin buying corporate bonds as part of its quantitative easing policy in June.

NO HELICOPTER

Acting to halt speculation that he was entertaining the prospect of so-called “helicopter money” — handing money directly to the public — to kickstart the economy, Draghi stated the bank had not discussed that option.

 

While expectations were for nothing new, it appears positioning was for moar as Draghi’s lack of bazooka-ness has sent European stocks lower as EUR spikes against the USD…

and German Bund yields soar…

Nowhere was the ongoing surge more obvious than in the construction complex, where steel reinforcement bars jumped to a 19-month high in Shanghai, buoyed by an improving Chinese property market, supporting the Australian dollar.

Commodity gains boosted the outlook for inflation, sending German bund yields to a four-week high. Sweden’s krona rose after the Riksbank expanded bond buying less than some investors expected. Metal increases boosted European miners, while most industries on the Stoxx Europe 600 Index declined.

Meanwhile in stocks, Europe’s Stoxx 600 slipped 0.5%, after closing at its highest level since January. Miners in the gauge are heading for six-month high. Carmakers rallied, boosted by a 5.1 percent jump in Volkswagen AG after a person familiar with the matter said it agreed to set aside at least $10 billion to resolve civil claims by the U.S. government and lawsuits by American car owners over diesel vehicles rigged to cheat pollution controls.

Global Top News

  • Draghi Can Argue Glass Is Half Full as ECB Pumps Up Stimulus: unemployment is falling and euro-area growth is continuing
  • Oil Trades Near 5-Month High as U.S. Crude Production Declines: U.S. crude output falls to lowest since Oct. 2014: EIA
  • VW Said to Pay At Least $10 Billion in U.S. Cheating Deal: carmaker’s plan covers lawsuit claims by government, motorists
  • Qualcomm Forecasts Are In Line on Progress in China Dispute: stock falls on concern chipmaker may lose Apple orders
  • AmEx Profit Beats Estimates as Purchases Climb; Shares Rise: revenue advances 1.6% to $8.09b, in line with estimates
  • Yum Brands Profit Tops Estimates as China Unit’s Sales Gain: company raises its annual forecast for operating profit
  • Vale Profit Prospects Bolstered by Record Output in Iron Rally: iron output of 77.5m tons is highest for first quarter
  • Wal-Mart to Cut Board to 12 Directors as Four Members Retire: board to maintain independent majority at 67% of its members
  • BHP Expects Iron Ore Prices to Drop as More Supply Swamps China: co. sees mergers and acquisitions as being unlikely
  • Sony Operating Profit Misses Forecast on Smartphone Slump: co. revises outlook ahead of April 28 earnings announcement
  • Saudi Arabia Mulls Dual Listing, Traded Fund for Aramco IPO: kingdom seeking ways to broaden investor base for huge IPO
  • Companies reporting earnings today include Alphabet, Microsoft, Verizon, Visa, Starbucks, GM
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s