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14 Dec 2023

The European Central Bank held interest rates steady for the second meeting in a row, as it revised its growth forecasts lower and announced plans to shrink its balance sheet

ECB's Lagarde: We did not discuss rate cuts at all BUT markets price in 5.3 cuts for 2024. “The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary,” it said in a statement. Source: Bloomberg, CNBC

30 Nov 2023

ECB QT continues. ECB balance sheet back <€7tn, shrank by €5.3bn to €6,996bn, lowest since Jan2021

Total assets now equal to 50% of Eurozone GDP vs Fed's 28% & BoJ's 128%. And Lagarde has warned that the timeline for ending PEPP reinvestments and so QT could be accelerated. Source: HolgerZ, Bloomberg

8 Nov 2023

Will Lagarde / ECB cut rates sooner than anticipated ?

Source: AndreasSteno

27 Oct 2023

ECB's Lagarde: "Rate cuts weren't discussed, would be totally premature".

Meanwhile, markets see the first ECB cut at April 2024 meeting. Source: Bloomberg, HolgerZ

23 Oct 2023

This chart from Robin Brooks highlights what is curently happening at ECB level: QE for some and QT for others

This was NOT supposed to happen. Remember: founding principle for the ECB is separation of monetary and fiscal policy. That's why ECB QE was initially subject to the capital key, so it couldn't favor one country over another. Could this last for ever? Source: Robin Brooks

15 Sep 2023

Some interresting comments by / Alfonso Peccatiello

on yesterday's ECB hike and Lagarde's comments: "The demand for corporate loans in Europe has plummeted as borrowing costs remain prohibitively high. The Eurozone credit creation process is quite reliant on bank lending, so this matters. And indeed markets aren't reacting as if the ECB just hiked - quite the opposite: bond yields have moved lower and the EUR has taken another dip. The risks of an ECB policy mistake keep growing".

14 Sep 2023

European Central Bank hikes rates to a record 4% as inflation risks outweigh economic gloom.

- The ECB just raised its key rates again today, by 25bp (main Refi rate at 4.50%, deposit rate at 4.00%) - Concerns around the underlying inflation dynamic appear to have overwhelmed the ongoing negative (and concerning) dynamic in Europe’s economic growth: "inflation continues to decline but is still expected to remain too high for too long. The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. In order to reinforce progress towards its target, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points." Source: Bloomberg

14 Sep 2023

EURUSD pair continues a bearish trend after ECB hike

EURUSD stays on a rather bearish EUR bullish USD trend which wasn’t helped by today’s ECB decision to increase rates by another 25bps. Shortly after the ECB’s announcement, US PPI came out slightly higher than expected which led the pair to reach a low of 1.0656 before stabilizing around 1.0675.

Support: 1.0650, 1.0605, 1.0560
Resistance: 1.0720, 1.0770, 1.0810

Source: Bloomberg

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