Mario Draghi managed on Thursday to talk down the euro – the latest volley in the cover ‘currency wars’. Ralph Atkins, capital markets editor, analyses the president of the European Bank’s verbal game theory.
The euro is down (perhaps rationally: if the euro solution is to print money, debasement offsets the continued existence of the currency). Just as important for the technically-minded is that the euro failed to break its 30-day moving average, at $1.237.
The German 2-year yield has set a new low, coming close to -0.1% before recovering a little. Flight capital, in other words, is still headed for Germany. Longer dated German bond yields remain wider than last week, but are still tighter than at the start of July. There is not much confidence that Draghi will succeed in the face of the Bundesbank’s opposition.
On the plus side, Spanish yields continue to improve, with the 10-year having now plunged a full percentage point since last Tuesday, and short-dated yields also dropping sharply. Again, though, things remain worse at the end of July than they were at the start.
The two most important eurozone charts after the turn
The new blog challenge: put these in order of how awful they’ve been since the euro was created:
It is a serious challenge, given how much everyone hates all the banks. But if forced to choose, the order might reasonably go something like the above – the periphery, in order of rescue, middling eurozone, then the Brits (many of them already nationalised, plus the Libor-struck Barclays), followed by under-capitalised Germans and finally the resurgent Americans as the best of a bad bunch.
Equity investors don’t seem to share this view, as this great chart shows. Read more
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This blog is about asset allocation at the global level. It is an ongoing attempt to explain why investors and markets behave the way they do.
John Authers officially takes the "Long View", while James Mackintosh takes the "Short View" when it comes to investment decisions. In practice both of us end up taking both long- and short-term views, and occasionally disagreeing with each other; all comments and disagreements are very welcome.
James Mackintosh is the Financial Times' Investment Editor, writing and presenting the daily Short View column and video. In 16 years at the FT his posts have included comment editor, motor industry editor and hedge funds correspondent, as well as spells in the Parliamentary lobby and Paris. He was the first reporter hired for FT.com, joining two weeks before it launched.
James has a degree in philosophy and psychology from the University of Oxford, where he spent two further years in post-graduate study of philosophy. If he wasn't here, he'd be skiing.
John Authers is the Financial Times' Senior Investment Columnist, writing the Saturday Long View and a regular Monday column. In a 22-year career at the FT, his previous posts have included global head of the Lex column, investment editor, US markets editor, Mexico City bureau chief and US banking correspondent. His latest book is The Fearful Rise of Markets.
John has a degree in Philosophy, Politics and Economics from the University of Oxford, and an MBA from Columbia University. Perhaps more interestingly, he captained the highest scoring team in the history of University Challenge while at Oxford, and also once sung in Pavarotti's backing choir.