ECB Insights: Morning Europe Market Bid Analysis

Vidya Ranganathan takes stock of the European and global markets.

The minutes of the October meeting of the European Central Bank and the rapid Purchasing Managers’ Indices (PMIs) from a large number of European countries are the highlights of Thursday’s market day, which will be also disrupted by the Thanksgiving holidays in Japan and the United States.

The November flash PMIs, which will be released globally, are expected to help investors gauge recession risks and how quickly interest rate cuts will begin. The Eurozone PMI is already below 50, indicating a contraction in economic activity. The same is true in Britain, while the October manufacturing PMI in the United States contracted sharply.

When it comes to the ECB, the market is adopting a strategy of rumors and facts, as it appears that investors globally have such a dovish bias that they will only react to the strength of the data. Interest rate futures show the market is pricing in rate cuts between now and April and more aggressively in June.

However, it’s Thanksgiving time, and traders know not to rely on every market move.

ECB speakers also did not make it easy to question the policy, given Mario Centeno’s pessimistic comments, Governing Council member Joachim Nagel’s position that rates are close to their summit, and the warning from Christine Lagarde, President of the ECB, against premature celebrations.

Later on Thursday, the Swedish central bank will announce its latest monetary policy decision and the decision on whether to raise interest rates is expected to be a very tight one. A Reuters poll showed 10 out of 19 economists forecast a hike, while the market is leaning against such a move.

A stable move would likely be seen as the end of the cycle and put the krona under pressure, making the case for a hike today.

Meanwhile, the British pound and the UK’s FTSE 100 index took note of UK Finance Minister Jeremy Hunt’s autumn budget and the gloomy economic outlook that comes with it. Gilt yields are also rising as investors have taken note of Mr Hunt’s obvious pre-election gambit and the future implications of unfunded tax cuts.

Main developments likely to influence the markets on Thursday:

Econ: Global flash PMIs, Riksbank policy decision, minutes of the ECB’s October policy meeting.

This article is originally published on

Beth Malcolm

Beth Malcolm is Scottish based Journalist at Heriot-Watt University studying French and British Sign Language. She is originally from the north west of England but is living in Edinburgh to complete her studies.