Market Sense

0

0
Digging the trenches
Fri, Sep 5 2008, 08:07 GMT
by Yapi Kredi Bank Economic Research Department
UniCredit Group
The ECB is digging the trenches and bolstering its defenses in preparation for a long siege by a growing number of consumers, producers and market participants clamoring for lower rates. With the Eurozone flirting with technical recession and headline inflation already edging down thanks the oil price correction, the ECB today focused its efforts on taking the wind out of the sails of those asking for monetary easing. Trichet prepared the ground for arguing that a sustained reduction in oil prices will help growth and therefore reduce the need for monetary easing; he also elegantly conveyed the idea that the ECB is already perhaps too tolerant and sensitive to the growth risks, given the inflation outlook. The ECB’s goal over the coming months will be to prevent the market from pricing in rate cuts for as long as possible. This defensive stance, however, will not be enough to offer the EUR any substantial support, especially as Trichet today gave his blessing to the recent correction in EUR/USD; with some help from the ISM, EUR/USD has now broken through 1.44 and might fall significantly further if tomorrow’s NFP surprises to the upside. The ECB also announced a tightening of its collateral policy, which should make “originate to repo” harder at the margin. The ECB has been a key provider of liquidity for the banking system since the inception of the crisis; I trust that the changes have been calibrated with extreme care, but their impact will need to be closely monitored, given the already stressed conditions of financial systems.
Published on
Fri, Sep 5 2008, 08:10 GMT
Archive
- Slow down! Exit ahead…
Published On Fri, Nov 6 2009, 05:59 GMT
- Soul-searching
Published On Wed, Oct 28 2009, 14:11 GMT
- Euro trap
Published On Wed, Oct 21 2009, 10:42 GMT
- Bluff
Published On Fri, Oct 9 2009, 05:55 GMT
- Business as usual
Published On Thu, Sep 24 2009, 14:19 GMT
[ View All ]
UniCredit Group
| Via A. Specchi, 16 00186 Roma
http://www.unicreditmib.eu/ | communication@unicreditgroup.eu
Legal disclaimer and risk disclosure
The content of the Investor Relations section (hereinafter, Investor Relations) of the UniCredit website is the property of UniCredit. No prior authorization is required to store the content of the section in any format, or to reproduce or consult the said content exclusively for personal use.
The data, opinions and special sections (dates of assemblies, dates of board meetings, press releases, presentations, etc.) appearing in Investor Relations are included exclusively for the purpose of providing information on the activities of the UniCredit banking group, Gruppo Bancario UniCredit. The said data, opinions and special sections are not to be understood in any way as an incitement to saving on the part of the general public or as a means of promoting any specific form of investment or trading activity. Furthermore, the said data and information are not to be understood as a means of promoting or placing financial instruments, investment services, or banking/financial products/services.
The information may be used for personal investment decision-making purposes entirely at the user's risk.
Before terminating any operation directly or indirectly based on the information presented in Investor Relations, users are advised to contact their bank or other authorized financial broker for confirmation of the validity and accuracy of the said information and of the appropriateness of any such operations, as described in Investor Relations, in view of the user's personal needs, income, and economic or financial conditions.
The information contained in Investor Relations is produced by internal Gruppo Bancario UniCredit sources. UniCredit reserves the right to modify the said information and the functional and operational use specifications applying to Investor Relations as and when it chooses to do so, at its own discretion and with no forewarning.
UniCredit will do its utmost to ensure that the information presented in Investor Relations fully conforms to the requisites of reliability, truthfulness and accuracy, and that the said information is fully updated. UniCredit accepts no responsibility for any errors or imprecision in the content of Investor Relations resulting from circumstances that cannot be ascribed to UniCredit.
Furthermore, UniCredit accepts no responsibility for any untoward consequences of brief or prolonged interruptions, delays or dysfunctions in the provision of the Investor Relations service due to power blackouts, telephone line failures, Internet failures or circumstances beyond the control of UniCredit.
For all further information or explanations, please contact the operators indicated by the "Contacts" section of Investor Relations.