Thursday, October 20, 2016

What is really behind Draghi’s mysterious Silence? – THE WORLD

Um 15.17 PM it was all over. In a way, Mario Draghi’s Historic had done. He had one of the shortest press conferences completed, after an interest rate meeting in the history of the European Central Bank (ECB).

Europe’s most important currency of the guardian summed up during the 47-minute short. This was because he had little to say to anything to. It is not as harmless as it sounds at first.

Because the continent is currently in urgent need of ground-breaking responses, and after orientation. About how to purchase it with the bond program continues, which is scheduled to end in March 2017.

The yield on ten-year German government bonds is back in the Plus

The yield on ten-year German government bonds is again rotated to the Plus

source: infographic world

Or, as the ECB’s loose a possible exit from the ultra-monetary policy presents as the Inflation, suddenly, has reported. “We have not discussed today,” was always Draghi’s standard answer. Also on repeated demand, he was not saying. After all, he had to know that both an infinite duration and an abrupt end to the bond-buying program is unlikely.

Europe’s governments want to know how it goes

This is the most interesting topic for not only investors, but also many governments in the Euro-Zone. The monetary authorities can leave the household budgets of the States with a decision to waste. With their bond purchases per month for 80 billion euros, the ECB keeps the interest rates of the securities artificially low.

So have to pay Italy for ten-year-old debt of just 1.37 percent for two-year-old Rom from the investors even get money, because the interest rates are negative. In the case of a debt of 2.22 trillion euros at the end of the purchase programme, or a melting of the volume would be for Italy to be a disaster.

However, Draghi revealed nothing. The input statement, the he in the first minutes of reading, was almost word-for-word to that of the session in September. “You had the feeling, it was actually just about to talk about what has not been spoken,” says Christoph Kutt, head of interest rate strategy and government bonds at DZ Bank.

What has been discussed by the governing Council at all?

Many market participants wondered what had been discussed by the governing Council at all. And the fact that the record low interest rates, nothing changed. The key interest rate remains at Zero, the Deposit rate for banks at -0.4 percent. Accordingly, the markets reacted confused on Draghi. The Euro shot first on 1,1040 Dollar upwards, and then on 1,0926 to fall.

left unchanged

left unchanged

source: infographic world

A similarly volatile picture for bonds and shares. The yield on the ten year government bond climbed initially to 0.07 percent, and return later fell to 0.01 percent. The Dax fell on 10.592 points and climbed thereafter to 200 meters.

experts puzzle over the strange Silence of the President of the ECB. The group sees that this is an attempt, firstly, the monetary policy decisions of the U.S. Central Bank to be seen. The should raise interest rates soon, then the ECB would have to do less.

Want to force Draghi’s governments to reform?

another group believes that Draghi want to leave the politics in the Euro-Zone deliberately Unclear, so this leads, finally, structural reforms. For years, the President of the ECB calls for it, but given the low interest rates, the heads of state and heads of government in the 19 main cities in the Euro-Zone have little to do.

Now, Draghi could flirt with the exit, so that finally something happens. “The reminder of structural reforms, a little reminiscent of parents telling their child to eat his vegetables when the sweets are in the grip width,” says Steven Englander, currency strategist at Citi.

the governing Council of the ECB had a falling out?

A third group sees Draghi’s beredtem Silence is an indication that the governing Council may be divided and easy time to the country to go, to reach an agreement.

Others think that the Draghi-appearance for a particularly sophisticated Form of the Market approach. Finally, the ECB has raised expectations that you may have to re-capture.

“the ECB has today set out how it goes with the bond-buying program, her art is to suggest the markets a bit, without saying anything,” said Otmar Lang, chief economist of the Targobank. In this way, he could take in advance of a possible exit from the loose monetary policy, the shock effect.


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