About the central bank that couldn’t shoot straight (that’s the ECB), we take note of a marked tightening in euro money market conditions. In the basis the euro is now trading at a fat premium to the dollar, which has helped push up Euribors further relative to the deposit rate. In our view, there’s just one reason for Euro Area money markets being as tight as they are: timid and thus ineffective ECB easing.

 

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