Friday, 4 September 2015

ECB revamps QE, stocks rally

While the Federal Reserve is preparing to raise interest rates, the European Central Bank looks like expanding monetary stimulus. From Bloomberg:

Mario Draghi unveiled a revamp of quantitative easing and signaled officials might expand stimulus if the rout in financial markets continues to weigh on growth and inflation.

The European Central Bank president said in Frankfurt on Thursday that the Governing Council raised the share of bonds the ECB can buy to 33 percent of each issue from 25 percent, and that policy makers are ready to make more adjustments to ensure the full implementation of the 1.1 trillion-euro ($1.2 trillion) program. A weaker global outlook prompted an across-the-board reduction of the institution’s growth and consumer-price forecasts through 2017. The euro slid to a two-week low.

The announcement initially pushed stocks up. The STOXX Europe 600 rose 2.4 percent on Thursday and the S&P 500 briefly rose more than 1 percent.

However, the latter fell back later in the day to finish up just 0.1 percent.

US 10-year Treasury yields fell two basis points to 2.16 percent while West Texas Intermediate crude rose 1.1 percent.

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