ECB

Andrew Bailey can freeload on Fed and ECB largesse

18 June 2020

The Bank of England boss will buy an extra 100 billion pounds of bonds, but at a slower pace. His peers are being more open-handed. For example, banks just borrowed 1.3 trillion euros from the European Central Bank. Ample global liquidity will help Bailey contain UK debt yields.

Corona Capital: Next crisis, Overvalued markets

16 June 2020

Concise views on the pandemic’s corporate and financial fallout: Deutsche Bank analysts sound a warning about future catastrophes, while investors try to square overpriced stocks with their hopes of a recovery.

Christine Lagarde is having a good crisis

4 June 2020

The ECB boss will buy more assets and for longer than initially planned. She is as decisive as her predecessor, Mario Draghi, but luckier. Politicians are splurging to revive economies. Growth will recover faster because fiscal and monetary policies are pulling the same way.

Corona Capital: ZoomInfo IPO, U.S. trade

4 June 2020

Concise views on the pandemic’s corporate and financial fallout: ZoomInfo goes public with a big pop despite Covid-19; and America’s goods-trade deficit with Europe will test Washington’s mood.

Franco-German motor nudges EU off virus crash lane

19 May 2020

The pair proposed a 500 bln euro fund to help pandemic-hit states. That recognises the need to share the fiscal burden and rely less on ECB boss Christine Lagarde. But market jubilance is premature. Opposition from northern countries means the plan will probably be watered down.

Curbing German exceptionalism has political price

11 May 2020

A national court’s ruling on ECB asset buying has challenged the primacy of EU law. If politicians can’t defuse the stand-off, Brussels will have to take legal action against Europe’s paymaster. The fiasco is likely to give Euroscepticism across the continent a boost.

ECB firefighters can circumvent German roadblock

5 May 2020

A ruling by Teutonic judges challenged the European Central Bank’s long-standing efforts to use bond buying to stimulate the euro zone economy. Inventive rate-setters will find ways to plough on to achieve their aims. But it’s a very German way to test their independence.

Free ECB money is little use for battered banks

1 May 2020

President Christine Lagarde launched yet another programme to slash funding costs for lenders. History suggests much of the benefit will flow straight to borrowers, as intended. Loading up on southern European debt would be profitable but risky, and may irk supervisors.

ECB’s low inflation problem is worse than it looks

30 April 2020

Depressed energy costs meant euro zone consumer prices rose 0.4% in April from a year ago. But President Christine Lagarde may in reality be even further away from her just-below 2% goal. Statisticians’ efforts to fill data gaps during lockdown risk overstating price pressures.

Central bankers have more cards up their sleeves

29 April 2020

Fed Chair Jay Powell and his peers have fashioned new tools to fight the Covid-19 crisis. In future downturns, they could copy the BOJ’s stock buying and, in extremis, consider financing governments directly. Only surging inflation or overt political meddling will hold them back.

Christine Lagarde will need an even bigger bazooka

29 April 2020

The ECB boss is snapping up so many bonds to keep Italian and other southern euro zone debt yields in check that she may soon have to augment the 750 billion euro purchase plan unveiled less than two months ago. The more she does, the more squabbling time she buys EU leaders.

Crisis gives ECB cover to cast off rating shackles

22 April 2020

Central banks have historically steered clear of junk bonds. But the Federal Reserve’s move to buy debt rated below investment grade gives its European counterpart an excuse to follow. Moving swiftly would help it avoid a damaging crisis if the Italian government is downgraded.

Mr. Whatever It Takes is Italy’s post-corona card

2 April 2020

As ECB chief, Mario Draghi saved the euro in 2012 with monetary policy magic and prevented an Italian default. As Italy crumbles under the cost of a spiralling epidemic, his name has emerged as either the next premier or president. But he shouldn’t rush into either job just yet.

EU divisions risk inflating crisis bill

27 March 2020

European leaders failed to agree a joint fiscal response to the pandemic. Despite European Central Bank support, EU inaction makes it harder for Italy and other indebted euro zone nations to ramp up spending to support their stricken economies. That will raise the ultimate cost.

Christine Lagarde proves a worthy heir to Draghi

19 March 2020

The ECB boss echoed her predecessor’s “whatever it takes” pledge by unveiling 750 billion euros of new asset purchases. That eases tension in euro zone bond markets but can’t offset the global dash for cash. Crucially, she also opened the door for other once-taboo measures.

ECB has a nascent euro zone crisis to head off

18 March 2020

The yield spread between German bonds and French or Dutch ones has suddenly widened. That, more than a blowout in the gap with Italy, was the sign in 2012 that markets were questioning the single currency’s future. ECB boss Christine Lagarde has little time to nip it in the bud.

Central bank largesse is mixed bag for EU lenders

13 March 2020

Christine Lagarde and Mark Carney are giving banks free money and capital relief to fight a virus-induced slump. Investors will see few benefits, though. Higher dividends are taboo, and cheap funds will finance lower-cost loans. Balance sheets have become a social safety net.

ECB’s stealth easing enlists banks in virus fight

12 March 2020

President Christine Lagarde left interest rates unchanged but used other tricks to support the euro zone economy through Covid-19. Lenders can borrow at sub-zero rates and dip into capital and cash buffers. They have every incentive to help her limit the damage from the slowdown.

Oil shock gives central banks excuse to be bold

9 March 2020

Crude prices plunged days before the ECB meets. While Christine Lagarde and her global peers are supposed to look beyond one-off jolts, inflation expectations have been crushed in a market already gripped by virus fears. That gives rate-setters another reason to be decisive.

ECB gives banks a reason to sort themselves out

28 January 2020

Europe’s lenders have stronger balance sheets but aren’t very profitable, the regulator’s annual review shows. Executives blame low interest rates and strict capital rules, but these won’t change soon. If banks are too slow to cut costs or merge, they face even closer scrutiny.