Intraday Market Thoughts

ECB Pledges, BoC Punts

by Adam Button
Mar 11, 2021 16:53

The ECB kept the size of its EUR 1.85 trillion pandemic bond buying program, ut pledged to step up government bond purchases in the next few months to stem the sharp rise in bond yields and help support the economy. USD resumed its selloff both the DOW and S&P hit new highs, while Nasdaq is breaking above a key trendline resistance of 12980, now facing crucial resistance at 13120/30. All eyes shift to the 30-year US govt bond auction for clues on foreign demand for longer debt maturities. Listen to Ashraf's detailed voice note on his Telegram Channel on about the importance for the Fed and US Treasury to force yields below GDP growth and inflation. Listen here. 

ECB Pledges, BoC Punts - Telegram English Voice Note Debt (Chart 1)

The BOC offered few hints about what's coming next while holding rates steady. There was some speculation they could dial down the bloated QE program but most were waiting for new forecasts in April anyway. There's no doubt those forecasts will be better as the BOC acknowledged in its statement that the economy has been more resilient and said Q1 GDP will likely be positive.

CAD initially slumped on no changes to QE but later rallied to finish near the best levels of the day on USD weakness, commodity strength and risk appetite.

The risk is that's not enough of yields rise.


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