In the fixed income market, the ECB’s policies are being weighed – US statistics were surprising


The interest rate and foreign exchange markets have been weighed against the decisions taken by the European Central Bank at its two-day meeting on its monetary policy guidelines.

The ECB expects that purchases of securities under the interest rate pandemic PEPP program will accelerate in the current quarter compared to the beginning of the year. The program covers a total of EUR 1 850 billion. It is scheduled to continue until at least March next year and, in any case, until the end of the interest rate crisis.

The ECB reports that securities purchases under APP, which is part of its longer-term purchase program, will continue at a monthly rate of € 20 billion.

No changes were made to key interest rates, with the main refinancing rate being kept at 0.00 per cent, the liquidity facility rate at 0.25 per cent and the bank deposit rate at -0.50 per cent.

The ECB expects interest rates to remain at current or lower levels until inflation stabilizes at 2% over the medium term, which is the ECB’s new inflation target. The target was recently raised to exactly 2% from just under 2%.

In addition, the European Commission published a preliminary July reading of its consumer confidence indicator, which was -4.4. Thus, consumer confidence fell from -3.3 in June, although it was expected to rise to -2.6.

Statistical surprises were also seen in the United States, with the number of unemployment benefit claims last week sharply exceeding economists ’estimates. There were 419,000 applications, compared with an average of only 350,000 by economists. In the previous week, according to later information, 368,000 applications had been received.

June sales of old homes, on the other hand, fell short of forecasts, reaching 5.86 million instead of the forecast of 5.90 million.

Despite new statistical releases and ECB policies, there has been no clear trend in long-term government bond market rates. In the afternoon, however, interest rates have fallen by about two basis points in the United States, Britain, Germany and France.

In currencies, the euro-dollar exchange rate would rise high after the ECB announces its intentions, but has since fallen to almost pre-peak levels. The pound has strengthened against other major currencies today as the yen follows suit.

The euro currently earns about $ 1,180, 130 yen and 0.857 pounds.


Source: Arvopaperi by www.arvopaperi.fi.

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