Euro: Draghi to dust off the QE bazooka

The main focus for investors yesterday was the latest Eurozone credit and money aggregates, because the US market was closed as Americans celebrated their Thanksgiving holiday.

M3 money supply bounced last month, rising to 5.3% year-on-year against a market expectation of +4.9%. Total loans to the private sector rose to +0.8% year-on-year and to non-financial corporates loans were also up. Despite the positive data, according to investors this should not change the expectation that the European Central Bank (ECB) will introduce more easing next week.  

A report from Reuters yesterday suggested that the ECB is talking about a two-tiered bank charge system on cash held at the ECB. It was reported that ECB officials might be considering a split-level rate, which would impose different charges for banks based on the amounts held at the ECB. There were not many details, but it suggests that Mario Draghi could deploy the famous “quantitative easing bazooka.”

Around the markets

Markets in the US close early today so there’s no US data scheduled for release. However, it’ll be anything but quiet for retailers around the world today because it’s Black Friday, and that data will come out come out later in the day.

But investors will be off to Europe again for their data, and there’s plenty on offer. French consumer spending numbers, the Spanish consumer prices index, November’s Eurozone confidence indicators, and German consumer confidence figures are all scheduled for release. 

In the UK, the preliminary gross domestic product report for the third quarter is due for release. Expectations are for growth of +0.5% quarter-on-quarter and +2.3% year-on-year, which should confirm that Britain’s economy has expanded for 11 consecutive quarters.

Have a fantastic weekend.