Daily Alert – Wednesday 15th June 2022: ECB holds crisis meeting on bonds

Mark NugentDaily Alert, June 2022

Daily Alert – Wednesday 15th June 2022: ECB holds crisis meeting on bonds

Good morning.

Today, the European Central Bank held an unscheduled meeting to discuss problems in the Euro Zone bond market, where the yields on bonds issued by the weaker economies are heading towards unaffordable levels. The meeting started at 11am local time in Frankfurt and was scheduled for two hours. So far, there has been no feedback and it is not clear if there is going to be some form of statement.

Elsewhere, as is common, markets are quiet ahead of tonight’s rate and statement from the US Federal Reserve. Markets are predicting a 75 basis-point hike rather than the previous consensus of a 50 basis-point hike. Some commentators say this will calm the markets. I am not sure how that works when it was the threat of an over-reacting Fed plunging the US economy into recession that was driving down equities last week and Monday. As always, if you ask two economists their opinion, you get three answers, as Churchill once quipped about Keynes.

Tonight, I will watch the Fed closely and wait for the market to decide what the new reality looks like.

I’ll be back tomorrow.

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