Draghi: Once again contained financial markets – Nordea Markets

Analysts at Nordea Markets point out that in terms of EUR rates, Mario Draghi once again showed his finesse in tackling the potential impact from a tighter monetary policy on financial markets.

Key Quotes

“The ECB has now signalled an end to the bond purchases by December 2018 without any big move higher in interest rates on the EUR curve. Well done, Mario.”

“Another factor that has worked to contain the upside pressure on longer core bond yields in the Euro zone is the fading momentum in Euro-area PMIs.”

“The eventual driver of higher longer bond yields in the Euro area (as well as in the US) will be higher core inflation. And there are good reasons to expect core inflation to pick up slowly but surely once we get on the other side of the summer.”

“We see risks tilted to the upside for EUR swap rates and government bond yields, once core inflation starts to pick up during the autumn.”