Investors yawned when the European Central Bank cut interest rates last week. This strategist says they were wrong.
Were you ready when the European Central Bank cut interest rates on July 5? If so, you had lots of company. That 25-basis-point move was so widely expected, you could almost feel the collective shrug.
The currency strategists at Deutsche Bank have other ideas.
"The marginal impact of the latest cut is likely to be much larger than previous easings," they wrote in a note to clients. "This is because returns in money market instruments and band depos may turn negative. We think this, combined with the very large amount of excess liquidity in the Eurosystem, will have a larger marginal impact on investment allocation decisions and could trigger greater capital outflows."
In case that's not enough to make euro investors sit up and take notice, the strategists also point out that the ECB has now demonstrated a more aggressive easing bias than the Federal Reserve, the Bank of England or the Bank of Japan.Page 1 of 2 | Next Page