by Tyler Durden
Wednesday, May 19, 2021 - 09:36 AM
In what some have dubbed a repeat of Greenspan s irrational exuberance description of the dot-com bubble in the 1990s, this morning the ECB warned in its Financial Stability Review (in which it used the word exuberance at least 8 times), that the euro-area faces elevated risks to financial stability as it emerges from the pandemic with high debt burdens and “
remarkable exuberance” in markets as bond yields rose. The stark warning, first reported by Bloomberg, sent risk asset reeling and cryptocurrencies tumbling and highlights mounting concerns that the flood of fiscal and monetary stimulus needed to fight the crisis is also building up dangerous imbalances.
EUR/USD Bullish Price Series Intact After Clearing February High
2021-05-19 14:00:00
David Song,
Strategist
EUR/USD Rate Talking Points
EUR/USD appears to be under pressure after taking out the February high (1.2243) as the European Central Bank (ECB) warns that the “risks to financial stability remain elevated,” but the exchange rate may continue to exhibit a bullish behavior as it extends the series of higher highs and lows from earlier this week.
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EUR/USD Bullish Price Series Intact After Clearing February High
The four day advance in EUR/USD seems to be unraveling as the ECB’s third issue of the Financial Stability Review (FSR) emphasizes that “solvency risks in the corporate sector are set to rise as public support measures fade,” with the update going onto say that “slack in labour markets and subdued investment could point to a sluggish recovery.”
The euro-area faces elevated risks to financial stability as it emerges from the pandemic with high debt burdens and “remarkable exuberance” in markets as bond yields rose, according to the European Central Bank (ECB). The language, echoing former Federal Reserve Chairman Alan Greenspan’s description of the dot-com bubble in the 1990s as “irrational exuberance,” highlights mounting concerns that the flood of fiscal and monetary stimulus needed to fight the crisis is also building up dangerous imbalances. If more upward surprises in US inflation prompts investors bet on earlier monetary tightening, driving up bond yields without an accompanying improvement in economic growth, “spillovers from US equity market repricing could be substantial,” the ECB said in its Financial Stability Review on Wednesday. “A 10 per cent correction in US equity markets could therefore lead to a significant tightening of euro-area financial conditions, similar to around a third of the tig
El impacto de la pandemia se centra en el turismo y en el sur, según el BCE euroefe.euractiv.es - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from euroefe.euractiv.es Daily Mail and Mail on Sunday newspapers.
Euro zone inadvertently supported zombie firms, ECB finds
Euro zone policies aimed at keeping the economy afloat during the pandemic inadvertently supported unviable or “zombie” firms and more targeted support is needed, especially as subsidies are phased out, a European Central Bank study concluded on Tuesday.
Zombie firms, kept alive by the availability of ultra-cheap credit, drag on economic growth as they take funding away from viable companies, fail to produce efficiency gains and endanger banks’ balance sheets.
“The economic impact of the pandemic and the policy response may have, at least temporarily, contributed to some degree of zombification,” the ECB said in a Financial Stability Review article.