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16 May 2014
ECB to cut rates - BBH
FXStreet (Guatemala) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman suggested that it appears that the ECB is more inclined to cut rates than introduce an asset purchase scheme
Key Quotes:
"Some funds managers had bought peripheral bonds in anticipation of QE, i.e., that the ECB would be buying bonds too."
"A cut in the repo rate is seen as largely symbolic and not necessarily support of peripheral bonds. Many participants are trying to work through the implications of a negative deposit rate. Some suspect it would make for cheaper funding for carry trades, we are less sanguine."
Key Quotes:
"Some funds managers had bought peripheral bonds in anticipation of QE, i.e., that the ECB would be buying bonds too."
"A cut in the repo rate is seen as largely symbolic and not necessarily support of peripheral bonds. Many participants are trying to work through the implications of a negative deposit rate. Some suspect it would make for cheaper funding for carry trades, we are less sanguine."