MBS RECAP: ECB Threatens Market's Allowance; Markets Pout

Posted To: MBS Commentary

Let’s be real. Asset purchases by major central banks are effectively an allow a nce for financial markets–free money that they know will be coming in each month in predictable amounts. Markets are so entitled by now that they’ve taken to writing their own calendar for the allowance payments. The current conversation surrounds today’s European Central Bank (ECB) announcement and the press conference with ECB President Draghi that followed. Although markets didn’t expect the announcement itself to contain any major changes, they were sort of hoping for Draghi to throw a bone regarding the extension of the central bank’s asset purchase program, currently scheduled to end in March 2017. Draghi threw no bones. Neither did he make any bones about the fact that negative interest…(read more)

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