Stocks and bond on the rise as Euro hits fresh low This week has seen the euro hit a nine-year trough as collapsing oil prices and worries about the world economy drove investors into the arms of sovereign #debt. From Japan to Germany to Australia, government borrowing costs reached all-time lows as oil fell 10% in just two days and investors wrestled with the risk of global deflation. The figures are expected to show the first annual fall in consumer prices since 2009, piling pressure on the European Central Bank to relaunch quantitative easing at its next policy meeting later this month. “We expect the #ECB to announce a sovereign QE programme on 22 January, and the first purchases to probably start in the following week” said #Citi economist Guillaume Menuet. Not helping the euro was a report Germany was making contingency plans for the possible departure of Greece from the euro zone. Angela Merkel made it clear that she wanted Greece to stay in the #Eurozone. She also stated she had no doubts whatsoever that it would be brought to a successful conclusion, but stressed the necessity of Athens to respect its commitments to its bailout program. As a result, investors are willing to accept less compensation for inflation risk over time, so pulling down yields on even the longest dated bonds.
Posted on: Thu, 08 Jan 2015 13:13:40 +0000
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