The European Central Bank initially received praise for its decision to push the deposit rate below zero as part of its truly unconventional monetary policy. The euro plunged, equities recovered, and euro area manufacturing outperformed its global peers.
Holders of long-term benchmark bonds have been handsomely rewarded by the ECB’s monetary policy experiment as 10-year yields in Germany have resumed their violent decline. And investors expect more, judged by the decline in short-term yields indicating a further interest-rate cut in March of at least 0.2 percentage points.
Read More