U.S. Government Bonds Strengthen After ECB Announcement


The European Central Bank announced on Thursday that it would wind up its €2.4tn bond-buying programme at the end of 2018, following the US Federal Reserve and the Bank of England in normalising monetary policy.

Euro slides: The euro has slumped 2.5% against the U.S. dollar after the European Central Bank announced plans Thursday to end its €2.5 trillion ($2.9 trillion) stimulus program at the end of 2018.

"The Fed, barring any unexpected financial market calamity, is primed to raise the interest rate every quarter, while the European Central Bank will continue to sit on their hands well into 2019".

Some analysts believe it could be even longer.

Automakers were trading mixed after industry data showed Europe passenger auto sales grew only 0.8 percent year-on-year in May, following a 9.6 percent rise in April.

As trade tensions resurfaced, the dollar hit a one-year high of $1.3160 versus the Canadian dollar.

The Euro US Dollar (EUR/USD) exchange rate climbed on Thursday, reversing yesterday's brief fall after US Fed Chairman Jerome Powell stressed than an inflation overshoot will be allowed.

"This has come as a disappointment to the rates market, which had priced close to 10bp of European Central Bank rate hikes by June 2019", he said, adding however that the euro sell-off was probably overdone. But Draghi, who runs the show, seems to think things are stable, so he's ready to stop adding that extra money into the system.

This was the largest gain in six months and was seen as a strong indicator of accelerating economic growth in the second quarter. Data for April was also revised upward.

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Brent crude was 1 per cent lower at $75.97 a barrel, while US West Texas Intermediate settled at $66.94, up 0.4 per cent on the session. This was the fastest growth since November, when prices gained 3.3 percent.

China will impose an additional 25 percent tariff on 659 USA goods worth $50 billion, the official Xinhua news agency reported on Saturday, citing the Tariff Commission of the State Council. U.S. President Donald Trump has chose to impose "pretty significant" tariffs and will announce a list targeting $50 billion of Chinese goods on Friday, and a second wave of products worth $100 billion has been cued up.

On Thursday, the data for the US economy were almost uniformly encouraging.

CBOT July corn fell to its lowest since mid-January and front-month soybeans dipped to a 9-1/2 month low.

"With U.S. -China trade war looming, a slightly weaker yuan may be in China's favor".

ASIA'S DAY: Asian stocks finished mixed.

Oil prices were little changed as investors eyed a key Opec meeting in Vienna.

Brent crude, the worldwide standard, fell 13 cents to $75.81 per barrel.

This story has not been edited by Firstpost staff and is generated by auto-feed.

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