So this is a ‘taper’ – a one-off move with the option to re-expand the pace of purchases if things go wrong. ‘Tapering’ would imply a steady reduction in the size of bond purchases, so perhaps then this is a ‘taper fade’, which is (I’m reliably informed) a hairstyle favoured by David Beckham.
The ECB announcement maintains an accommodative stance for monetary policy, steepening the yield curve even as it signals that the age of central bank bond-buying is drawing to a close. That’s left us with slightly higher longer-dated Bund yields, slightly wider peripheral yield spreads in Europe and, so, a drift back down for the euro.
We’ll see what the Fed does next week and then look forward to months of political uncertainty taking EUR/USD to parity.
Copyright © 2016 Societe Generale, eFXnews™Original Article
