Why euro zone bond yield ‘convergence’ may be something to fear

April 15, 2013

 

Are European bond investors looking for love in all the wrong places?

The premium bankers demand to hold various types of euro zone debt over that of Germany has recently come down. In normal circumstances, this might suggest markets are no longer discriminating between the risks associated with different member countries’ bonds. But analysts say the recent convergence is based on a precarious belief of ECB action rather than any real improvement in economic fundamentals.

German ghost of inflations past haunting European stability: Posen

April 15, 2013

“Reality is sticky.” That was the core of Adam Posen’s message to German policymakers on their home turf, at a recent conference in Berlin.

ECB eclipsed by BOJ

By Mike Peacock
April 4, 2013

The European Central Bank takes centre stage. While others in the euro zone are saying the way Cyprus was bailed out – with bank bondholders and big depositors hit – could be repeated, the ECB insists it was a one-off.

Firefighting in the euro zone

April 3, 2013

Money markets largely braved Cyprus’s bailout saga last week, but figures showing liquidity conditions are tightening suggest sentiment may not be as resilient the next time around.

Cyprus Plan B – phoenix or dodo?

By Mike Peacock
March 21, 2013

They’ve only been looking for it for a day but Cyprus’s Plan B has already taken on mythical status. A myth it might remain.

To print or not to print

By Mike Peacock
March 7, 2013

It’s ECB day and it could be a big one, not because a shift in policy is expected but because journalists will get an hour to quiz Mario Draghi on the Italy conundrum after the central bank leaves monetary policy on hold.

Euro zone triptych

By Mike Peacock
February 22, 2013

Three big events today which will tell us a lot about the euro zone and its struggle to pull out of economic malaise despite the European Central Bank having removed break-up risk from the table.

100-years of solitude in the euro zone

February 14, 2013

The euro zone slipped deeper into recession than economists expected in the fourth quarter of 2012 as Germany and France– the region’s two largest economies – shrank 0.6 percent and 0.3 percent respectively on a quarterly basis.

A statement of non-intent

By Mike Peacock
February 12, 2013

The flurry of activity about a G7 currency statement yesterday can now be put in perspective. It will almost certainly happen but it’s very much going through the motions.

Market/economy disconnect?

By Mike Peacock
January 30, 2013

Italy comes to the market with a five- and 10-year bond auction today and, continuing the early year theme, yields are expected to fall with demand healthy. It could raise up to 6.5 billion euros. A sale of six-month paper on Tuesday was snapped up at a yield of just 0.73 percent. Not only is the bond market unfazed by next month’s Italian elections, which could yet produce a chaotic aftermath, neither is it bothered by the scandal enveloping the world’s oldest bank, Monte dei Paschi, which is deepening by the day.