Feb 7 – Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
IT’S A NEW CYCLE: WAKE UP AND SMELL THE COFFEE! (0757 GMT)
The European Central Bank’s meeting last week turned out to
be quite a policy pivot.
With euro zone inflation running above 5%, money markets had
already been betting the ECB would wake up, smell the coffee and
possibly signal when it might follow the U.S. Federal Reserve
and the Bank of England in tightening policy.
But by opening the door to a rate hike in 2022, President
Christine Lagarde unleashed a massive readjustment, with German
10-year government yields seeing their biggest jump since the
March 2020 COVID-19 crash.
ECB governing council member Klaas Knot doubled downed over
the weekend, saying he expected rates to start rising in the
fourth quarter.
Quick take? Well, with the ECB also now on board to tighten
policy, this looks like a new financial markets cycle.
“The times of low growth, low inflation, low rates and
excess central bank liquidity are over…
