The Trader 

ECB changes tack

The Trader

ECB changes tack

At last Thursday’s European Central Bank (ECB) meeting in Latvia, president Mario Draghi said, "we anticipate that, after September 2018, subject to incoming data confirming our medium-term inflation outlook, we will reduce the monthly pace of the net asset purchases to €15bn (£13.18bn) until the end of December 2018 and then end net purchases".  In other words, they would at last end quantitive easing, having ratcheted up €2.4 trillion-worth of assets since it was launched early in 2015. He added that there was no chance of a rate rise until next summer – at the earliest – on which the value of a Bund future rallied smartly (10-year yields down to 0.333 per cent and just 50 basis points above 2016’s record low); Spanish 10-year Bonos just 40 basis points above their all-time low. A spectacular, counter-intuitive result.

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