Daily Note – Head over heels


Head over heels

The markets love for ECB QE

United States: Weekly claims below 300k for 6 weeks


Good morning

I had a fascinating discussion yesterday in Birmingham on the global economy. The main takeaway even in this genetically Eurosceptic audience is that QE in Europe will drive and is driving European equities through the roof. It’s a case of hold your nose and fill your boots.

Draghi didn’t realize was how in-love markets have fallen with QE. Now you can feel the love!

What you do at a central bank is only half the equation. The rest is how much you can convince markets and the public about its effectiveness. In this endeavour, Draghi should feel very comfortable.

Markets were wary of early rounds of QE in the US and Japan, unsure exactly what it would mean and how to trade it. That forced the Fed to reach for ever-larger numbers that would grab headlines and convince markets. As the Fed actually made the purchases it began to sink in just how much it would drive yields down and hurt the currency, but markets didn’t believe it until they saw it.


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Global Macro-Daily Note 17th April 2015


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