Lagarde the Laggard
The European Central Bank has taken on the image of the “last hawk standing,” talking unabashedly about the need to keep tightening.
The fate of Christine Lagarde was very similar to that of Jerome Powell about 18 hours earlier. She made a number of hawkish declarations, but markets espied a lack of commitment, and took that as an opportunity to bet that the hiking cycle was almost over.
Much remains to be seen, of course, but as Lagarde was both more hawkish than the Fed in the present, and more hawkish in terms of what she was prepared to commit to in the near future, it’s a very strange reaction for the market to bring European bond yields down far more than it has Treasury yields.
John Authers Bloomberg 3 februari 2023
Fed lost the day and risk assets headed for the moon
https://englundmacro.blogspot.com/2023/02/fed-lost-day-and-risk-assets-headed-for.html
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