Weekly Newsletter #16/2015

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Yields in Europe are still falling with the German government bonds yielding the least ever in the course of the ECB’s bond buying program. The Eurozones deflationary pressures have calmed a bit in march and markets are already discussing the ECB’s handling of their QE-measures if inflation revives and the targetet inflation is in sight. But this seems to be a bit hasty, as there is a long way to go until Europes economy is at a point, where the ECB will consider ending those QE measures.

Scarity of securities to buy seems not to be a problem neither, as Mario Draghi said. ECB is allowed to buy securities with a yield, that is over the ECB’s deposit rate of minus 0.2%. Even if this lowers the choice of potential bonds that can be bought, Draghi emphasized the flexibility of the program. In the same step he ruled out lowering the deposit rate to enlarge the choice of eligible debt. Regardless of all those “background noises” the European equity markets are still having a party, with all of the (cheap) liquidity fueling the current upward trend.

In the US the oil price attracted attention with WTI jumping 5.8% yesterday as the growth on the supply side eased a bit. US equity markets still are in “zigzag mode”, far away from mirroring the strong performance of European or Asian markets. According to the markets opinion the Feds decision to increase the rates will be postponed further – no upward pressure on the short rates can be seen on the market. In total the markets offer interesting opportunities. Mr. Erwin Lasshofer and his team at INNOVATIS would be pleased to show you ways of using those opportunities in the best possible way.