Trichet believes Bernanke to hold off on buying Bonds

European Central Bank President Jean- Claude Trichet may allow Federal Reserve Chairman Ben S. Bernanke to avoid loosening monetary policy tomorrow by helping engineer a rebound in global financial markets.

Since June 7, when Europe’s equities were in a two-month slump, Trichet extended through September the ECB’s offer of unlimited cash to banks and pledged to keep buying government bonds. The Stoxx Europe 600 Index has risen 6.6 percent, and the euro has appreciated 11 percent against the dollar, wiping away the past three months’ losses. The Markit iTraxx Europe Index, which measures the cost of protecting investment-grade company bonds against default, fell to the lowest levels since May.

Markets have come back because of “easing concern about liquidity defaults in Europe and the removal of some uncertainty after the European bank stress tests,” said Lena Komileva, head of G-7 market economics at Tullett Prebon Plc, a broker for commercial and investment banks in London. “That reduces the pressure on the Fed to implement immediate action.”

Bloomberg

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell