ECB Shows the Exit: Timing and Signposts

The widespread feeling after the November ECB meeting was that we should prepare for the beginning of the central bank’s exit strategy possibly, at least in terms of announcements, already at the December Governing Council (GC) meeting. The rationale for this is that on November 13 we will have the final confirmation that in 3Q […]

“Did we miss something?” Pros and Cons for a sustainable and strong eurozone recovery after 3Q 2009. Euro Thoughts October 19 -23 2009

The good news of last week was, as we flagged, the rebound in August industrial production with large upward revisions to previous data, while the not-so-good news was the first signs that investors’ sentiment, as measured by the ZEW index, is leveling off. Key figures of this week will be the flash release of October […]

Who is Afraid of the Global Rebalancing?

More than the uneventful October ECB meeting, the stream of strong IP numbers in the three largest economies of the area was the real news of last week. As a consequence, we decided to revise up our eurozone GDP forecast for the third quarter. We now see 3Q GDP at 0.4% qoq vs. our previous […]

Tales of a Two-Tier Money Market

The much-awaited 12-month Long-Term Refinancing Operation (LTRO) held on September 29 resulted in a total allotment of EUR 75.2bn in favor of 589 banks. The outcome is at the low end of the forecasts spectrum (ranging from EUR 50bn to EUR 300bn) and below our bet of a result within the EUR 125-175bn interval. More […]

Educated Guesses on the Upcoming ECB Auction and Thoughts on some Crisis Legends… – Euro Thoughts Sep 13-18 2009

The September press conference and the following interventions by Trichet, Weber, Bini Smaghi and other Council members have definitely clarified that the ECB is in no rush at all to act on rates; rather it wants to have at hand more concrete evidence that the recovery is gaining momentum and price risks start moving to […]

The Importance of ECB Wording on Inflation – Euro Thoughts Sep 7-11 2009 – UniCredit Group

Last Thursday my boss, Marco Annunziata, did not hesitate to define President Trichet a true statesman for his wise and transparent conduct of the ECB September press conference. In the last few weeks, with his intervention in Jackson Hole, the Sep 4 presser, and the op-ed in the Financial Times the following day, Mr. Trichet […]

Don’t get fooled! Euro is a one-way door

The current hot topic in the market isthe EMU breakup. Similar fears already spread across the markets in 2003 and 2004 when France and Germany paved the way to a “more flexible” SGP, and Italy’s Maroni said that he was thinking of calling a referendum to allow Italy to leave the single-currency area blaming the euro for the rise in the general level of prices and the loss of competitiveness. Last week, Standard & Poor’s put Ireland, Spain, and Portugal “on negative watch” and downgraded Greece by one notch. Consequently, peripherals sovereign cash and CDS spreads have widened further and betting websites now assign about 30% probability to the scenario of one country dropping the euro.

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