The European Central Bank (ECB) is expected to reduce interest rates on Thursday to 2.65%, continuing to be a 4.5% peak in the midst of greater volatility in bond markets.
The expected flexibility occurs as the markets represent at least three Fed rates cuts by 2025 and Germany and China take the tax flexibility route to underpin their respective economies.
In other words, the imminent flexibility of the ECB could only increase to the decrease in the current global liquidity, offering bullish signals to risk assets, including cryptocurrencies.
“In general, the liquidity conditions are supported and growing, to maintain the risk and cryptographic that push the highest, despite this recent correction about growth concerns,” said the founders of the Londoclub newsletter service in Thursday’s edition.
Volatile bond markets
The main inflation of the European Union is not yet in the objective of the central bank of 2%, which raises concerns about the imminent rate cut and its impact on European bond markets.
The 10 -year Bund in Germany has risen to 2.8%, the highest since 2011, staring pricing in the prosecution announcement of Germany. The spike has reduced the US yield differential in favor of the euro, which prevents the lowest dollar index. That, together with the tariff threat, makes the DXY index faster than in the first mandate of President Trump.
The yields of the United Kingdom bonds have also surpassed those of the US. Meanwhile, the 10 -year bonus of Japan has exceeded 1.5%, a maximum of 17 years, since the Bank of Japan fights to stop inflation after three increases in rates after almost ten years of negative interest rates.
Volatile bond markets can cause financial hardening, forcing investors to climb exposure to the most risky assets.
