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In The ECB We Trust

03 September 2014 by HCM

Early August the market had a brief scare after some worrying outflow numbers from high yield funds and on the back of geopolitical uncertainties. Since then, outflows stopped (and actually reversed back to inflows), people decided to adopt a sanguine view of the Ukrainian situation, and they have focused all their attention to the coming ECB meeting which takes place tomorrow. After Mr Draghi’s speech at Jackson Hole a couple of weeks ago, investors appear convinced that European QE is on its way, and that assets’ pruchases will be announced tomorrow lunchtime. That has led to a pretty aggressive phase tightening and credit risk premia are trading close their tightest levels since the financial crisis started in early 2008. Any disappointment in the decisions made by the ECB or any glitch in the following press conference could translate into a volatile beginning of September.