WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: At its monetary policy meeting on Thursday, December 8th, the ECB decided: (i) an extension of the asset purchase programme (APP) for 9 months to December 2017; (ii) a reduction in the monthly pace of asset purchases to €60bn from €80bn; (ii) two changes in the parameters of the programme, including a broader maturity range by decreasing the minimum remaining maturity of eligible securities from two years to one year and purchases of maturities with a yield to maturity below the interest rate on the deposit facility, to the extent necessary; and (iii) introduction of cash collateral in the PSPP securities lending facilities without having to reinvest it in a cash-neutral manner. Reacting to the ECB policy announcement, short-dated Bund yields dropped triggering a bullish steepening of the yield curve. In FX markets, after a post-ECB roller-coaster ride, the EUR/USD was hovering in European trade on Friday not far from recent year-to-date lows.
GREECE: The Greek PM, Alexis Tsipras, announced yesterday that the government is planning to utilise revenues of €617 million from this year’s budget over-performance to support with one-off provisions 1.6 million low-pensioners. In addition, he announced the postponement of the VAT increase in the islands that bear the brunt of the refugee crisis. These announcements reportedly came as a surprise to Greece’s official lenders, however, Greek officials claim that they do not contradict what was agreed in the summer of 2015 and thus official lenders cannot object to them.
Viewers can log herebelow and read the full report: Daily Overview December 9 2016