Across the Curve

More On Euro

Mark Chandler at Brown Brothers Harriman has a reason for the Euro strength that I had not observed elsewhere on the world wide web. He cites newspaper reports indicating that the ECB might establish a facility similiar to the UKs funding for lending facility. That implies that the ECB would not have to play the negative rates card so quickly.

Here is his note:

Via Mark Chandler at Brown Brothers:

There has been some press reports suggesting that the ECB is considering a new facility whose access is conditioned on new loans.  This would be similar to the UK’s funding-for-lending program.  This may be seen as euro bullish because it illustrates the fact that there are a number of other options for the ECB before having to really confront a negative deposit rate or outright bond purchases, which have been the subject of much speculation in the markets.

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