19 Jan 2015
ECB: Buy the rumour and sell the fact - BBH
FXStreet (Guatemala) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman bring up the buy the rumour sell the fact scenario around the forthcoming ECB.
Key Quotes:
"There are widespread expectations for the ECB to announce a broader asset purchase plan this week. The complexity of such a program leaves plenty of moving parts that can be fought and compromised over."
"Reports already suggest the direction of the compromise that will win a majority support, though once again probably over the objections of German representatives. In exchange for limiting the risk to the ECB itself, there may be an agreement for a more aggressive program."
"While the ambiguity of an open-ended program may be strategically superior, national central banks are unlikely to be given carte blanche either. There is also an issue of the quality of asset that can be bought."
"The easiest decision would be to declare any asset good acceptable for repo operations is good enough to buy. Another challenge is the significance of initial conditions."
"Roughly a quarter of the eurozone sovereign debt has negative yields. Given market positioning we caution of the risk of disappointment or buy the rumor, sell the fact type of activity."
Key Quotes:
"There are widespread expectations for the ECB to announce a broader asset purchase plan this week. The complexity of such a program leaves plenty of moving parts that can be fought and compromised over."
"Reports already suggest the direction of the compromise that will win a majority support, though once again probably over the objections of German representatives. In exchange for limiting the risk to the ECB itself, there may be an agreement for a more aggressive program."
"While the ambiguity of an open-ended program may be strategically superior, national central banks are unlikely to be given carte blanche either. There is also an issue of the quality of asset that can be bought."
"The easiest decision would be to declare any asset good acceptable for repo operations is good enough to buy. Another challenge is the significance of initial conditions."
"Roughly a quarter of the eurozone sovereign debt has negative yields. Given market positioning we caution of the risk of disappointment or buy the rumor, sell the fact type of activity."