Perspectives Blog

Inflation consternation

Martin Harvey, Fund Manager, Threadneedle International Ltd | November 5, 2013

An inflation slowdown in the Eurozone has prompted calls for central bank action, as reduced liquidity coupled with euro strength threatens the recovery. The expectation of imminent easing by the ECB should assert downside pressure on yields, and lead Bunds to outperform other markets. It is uncertain whether the ECB will act this week; we think any intervention is likely to be verbal, at least at first. October inflation in the eurozone slowe…

Quality milestone in the European recovery story

March 17, 2014

…buted. However, from a low base, there is potential for European growth to catch-up with other faster-growing areas of the globe. Political news has provided a further boost, with the German Constitutional Court referring the ECB’s Outright Monetary Transactions policy to the European Court of Justice, rather than rejecting it. This has been interpreted as a capitulation by the Germans in terms of their reluctance to support the European Union an…

Could tapering be good for stocks?

Fred Copper, Senior Portfolio Manager | December 16, 2013

…support this is weak as well. Second, there is a glaring counter-example of the impact of central bank policy on financial markets, which is Europe. As you can see in the chart below, despite a fairly steep contraction of the ECB’s balance sheet, equity markets have powered ahead. Bond yields, even in the troubled peripheral markets, have continued to decline. It’s hard to reconcile the notion of a positive causal link between central bank balanc…