European markets are trading mostly flat this morning after recording all time highs during this week. It was an interesting month during which we had a number of events which kept investors on their toes and fear of Grexit kept the volatility towards its peak.
Another interesting month is about to start and we have more drama coming our way. For starter, most of the bond yields in the Eurozone are trading in a negative territory, something which is making matter difficult for the ECB. The bank will also unleash and open the gates of its quantitative easing program to boost the growth in the Eurozone. The Eurozone confidence data are already printing a positive read of this data and there is a lot of sanguinity that this will do what other measures have failed to do so- kindle growth and lift the inflation.
With ECB leashing it’s beast, the quantitative easing, the anticipations are this will make money more cheaper in the Eurozone and banks will have inducement to lend to business and individuals. The lending standards are already eased off by the ECB so there is a little or no deterrent for the banks to shower their nation with cheap money.
The French consumer data released this morning has also shown evidence that the upcoming QE is having a positive impact as the reading came much healthier than the forecast. The consumer spending data came in at 0.6%, while the forecast was for -0.3%. But the most important and interesting economic data was the Spanish CPI y/y data which not only thrashed the forecast of 1.5%, but also tattered the previous reading of -1.3%. This is a very positive news for Mr Draghi.