Thursday, October 20, 2016

Dax-report: ECB keeps the feet at a standstill – Handelsblatt

stock exchange at noon: Dax looks to ECB meeting – Lufthansa flight

Frankfurtin Europe, stock exchanges have not great, on the quiet of the ECB to keep responding. Shortly after the results of today’s meeting of the Council were known, reduced the light days plus a little. The Dax was last 0.2 per cent firmer at 10.661 points. The majority of the players had already expected that the leadership will decide the European Central Bank’s new measures. Some people had disappointed for the October session is an extension of the bond purchasing programme desired and was. Now, investors are eagerly awaiting answers from Mario Draghi, the loads at 14.30 the press conference.

For questions to the head of the ECB, there is enough. The trillion-dollar bond program, which is especially controversial in Germany, buy difficulties. The Central Bank is currently buying European government bonds in a volume of a month of nearly 80 billion euros. The Plan: By the purchase the returns what makes the title unattractive to banks and this, in turn, to animate, to increase lending to fall. How many state buys title to the ECB of which a member of the Euro-system, depends on the so-called capital key. This indicates with how many percent the Central Bank of the country the ECB is involved.

The tool box of ECB

  • The most important Instrument of the policy rate, i.e. the interest rate that the commercial banks borrow from the Central Bank money, to admit it then, for example, as a credit to businesses and consumers. In August 2016, the ECB interest rate is at historically low levels of 0.0 percent. Low interest rates can boost the economy.

  • In normal times, the business banks from the ECB interest rate for excess money that you need to Park with the Central Bank. In June 2014, the monetary authorities lowered the interest rate below Zero. Currently, the credit institutions must pay a Penalty rate of 0.4 percent. The target is a weakening of the Euro and a reduction in the deposits of the banks at the ECB.

  • at the end of 2011/beginning of 2012, supported by the ECB, banks with rescue loans (LTRO) in the amount of one trillion euros. The loans were granted to small interest, and for three years. 2014 emergency loans followed, however, this time, to a much lesser extent.

  • Since the autumn of 2014 the ECB will start buying covered bonds (Covered Bonds) and pooled Loan securitisations (ABS). This is intended to give commercial banks the granting of loans.

  • In may 2010, started the ECB for the first time with the purchase of government bonds. The “Securities Markets programme” (SMP) should slow down the increase in the yields of bonds from troubled Euro-countries. Until the beginning of 2012, the ECB state papers for around 220 billion euros, mostly Italian bonds. In September 2012, the program “Outright Monetary Transactions” (OMT) replaced this measure: The ECB can be explained ready to purchase, if necessary, unlimited quantities of bonds of crisis States. Bought this frame so far, no bond.

  • For the so-called Quantitative easing, the Central Bank is printing themselves money and buys in large-scale bond – Government bonds and other securities such as corporate bonds. The ECB since March 2015 does. Until at least the end of March 2017, the monetary authorities want to pump in this way of 1.74 trillion euros in the market. This should help boost the economy and the persistently low Inflation back in the direction of the ECB-the target of just below 2.0 percent.

And herein lies the Problem: in the Meantime, so many bonds have a negative rate of return that the money politicians getting heavier, the mandatory capital to get the key in an upright position. The ten-year Federal bonds brought a return of at times below Zero. It comes to a shortage of securities that may be purchased. In the course of the year, the ECB had extended the time of purchase, on a private company. The program includes a total volume of 1.7 trillion euros, and is scheduled to run until March 2017. Mario Draghi had announced in the past few months, the ability to act: Should it be necessary, will extend the program. The same wording was also found in the present publication. When you look in the press section of the ECB website, the suspicion could arise that it was in the present communication the results of the last session.

in September, the Central bankers refused to take this step now. They wanted to first evaluate the effect of the programme, it was said at the press conference for the herb to start. The monetary authorities refer to the fact that already a positive effect in the figures show, a further easing would be premature. The overall situation remains difficult. The target output Inflation of just under two per cent remains far undercut the economic recovery in the Euro area is far from the full journey far, growth is on the horizon, but it is fragile.

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Now the subsequent press conference, brings once more into focus. If Mario Draghi delivers at 14.30 in front of the press, there reigns peace and quiet on the floor. Each statement could give an indication on the other course. In this case, the bond has expired the program as the main Instrument of monetary policy, the benchmark interest rate for the rank. This is located in March on the record level of 0.0 percent. The taboo – a further reduction – to not dare to even the unconventional ECB.

Some of the Bold from the world of Finance had recently brought an expansion of the purchases to share in the game – also an unlikely scenario. If the ECB does already difficult, without clear data to extend the bond purchases, how and why you should lift without the Need for a standalone stock program from the eaves? Perhaps Draghi is also to this speculation position.

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there are Many indications that the leadership of the monetary authorities is to keep the feet still and on a further basis waiting. Among other things, the Situation when the largest Player among the Central banks, the Federal Reserve. In its December meeting, it becomes clear whether the US Central Bank increased the key interest rates before the presidential election in the United States any Action.

European shares remained after the results in light Plus. The leading index of the Eurozone, the Euro Stoxx 50 closed 0.2 percent firmer at 3061 points. During the course deer, the Dax in Frankfurt also stabilized, bagged the second row. The MDax lost 0.7 percent to 21.394 counter, primarily because of the intrusion of the machine manufacturer Gea. The TecDax fell 0.3 percent to 1.781.


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