Martin van Vliet
Last quote by Martin van Vliet
Martin van Vliet quotes
Clearly it's not Bund tantrum 2.0. I think a few people are realising the sell-off was a bit overdone, and so yields are falling now. Equally, though, if some inflation indicators next week come out higher than expected we could see selling pressures come back.
Rhetoric will be very important this week. Draghi will try to play down the taper talk and may give some hints on what to expect in December.
There's a decent probability of tweaks being made. The only problem I have with this assessment is that ECB officials in recent weeks have denied that there are scarcity issues.
Ireland in the last few days has been the clear underperformer as markets penalise the country's strong trade links with the UK.
The focus clearly is on the implementation of the measures announced in March, which suggest that the ECB has adopted a wait-and-see approach before contemplating further easing measures.
Assuming they'll stop the QE programme in March 2017, our guess is that they might end up owning eight to 10 percent of outstanding corporate bonds.
The implication here is that markets increasingly doubt the ECB will be able to meet its inflation mandate, not just over the coming years but also over the coming decade. The behaviour of five-year, five-year inflation since the ECB meeting is somewhat at odds with what we saw after the October ECB meeting at which (ECB president Mario) Draghi also hinted at further easing, and when the five-year, five-year rate rallied.
The fact that 10-year German yields are back at around 50 basis points shows there is a flight to quality.
With a sustainable recovery not yet assured – this is still very much a jobless recovery – ECB President Draghi, in his press statement, will likely keep the door to further easing wide open.
April's rebound in euro zone retail sales raises hopes that consumer spending will help support the region's economic recovery.