The ultra-loose monetary policy pursued by central banks since the financial crisis has implied an unprecedented fall in discount rates, which has led to a massive front-loading of returns: not only for bonds, but also for equities. Does this mean you should take your profit now and sell?
The ECB’s latest salvo in the fight against the prospect of deflation was initially met positively by markets. But, a lack of a clear message that the Bank will cut rates further from here sent markets falling again almost as quickly.
The expected 10 basis point rate cut by the European Central Bank this week would provide a “big boost” to peripheral sovereign markets such as Italy, according to Tanguy Le Saout, head of European fixed income at Pioneer Investments.
Investors will remember 2015 as a year spent trying to guess what major central banks around the world would do or say next.
The last time the Federal Reserve raised interest rates, Daniel Craig had just taken on the mantle of James Bond and Sylvester Stallone had just successfully resurrected the Rocky franchise from the ignominy of 1990’s Rocky V.
ECB President Mario Draghi disappointed markets on Thursday. While the Bank delivered a 10 basis point cut to the deposit rate to an historic -0.3%, and extended the deadline of its asset purchase programme by six months, it kept the main refinancing and marginal lending rates steady at 5 and 30 basis points respectively.
Turbulence in bond markets has left bond investors nervous and cash piles high but while more movement is expected, certainty on a few issues could see investors moving back into the market during the second half of the year.
FBME bank has filed a request for arbitration with the Cyprus International Chamber of Commerce in a further move aimed at overturning the central banks unilateral decision to sell its Cyprus branch.
Management of international bank FBME, which has branches in Cyprus, has been taken over by Tanzanias central bank, according to a statement on the banks website.
Market observers choose their top five stocks that could boost portfolios in what could be a vigorous investment-driven rebound.
