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Economy => Economics => Topic started by: yellowpage09 on May 13, 2015, 01:43:00 AM



Title: Inflation risk is higher in Euro zone than US
Post by: yellowpage09 on May 13, 2015, 01:43:00 AM
http://www.fxwirepro.com/data/charts/20150512e30fc771yield%20return.jpg.jpg

Euro zone bond yields have risen the fastest, compared to other developed market counterparts.

Obvious reason for such is extremely one sided positioning in Euro zone bonds especially German bunds. While a sudden rush for exit might be creating such heavy price swings and high volatility.

However fundamentally speaking inflation poses greater risk for Euro zone than US and one might assume that it might be behind this sudden bond rout.

Why inflation is a greater threat to Euro zone?

  • European Central Bank's (ECB) asset purchase program has pushed Euro to its lowest level in a decade making Euro zone countries extra vulnerable to rising energy prices. Euro zone imports most of its energy needs from outside making it vulnerable to inflation importing. Moreover energy inflation is called bad inflation, which Mario Draghi might not be looking for.
  • ECB has just started its bond purchase program on March 9, 2015. Higher inflation will increase debate inside governing council over the purchase program that leaves ECB with two dilemma. Continuing bond purchase amid inflationary environment would pose risk of striking higher inflation and ECB to fall very behind the curve and cutting short the purchase program might derail the recovery seen in recent past.

Euro and Euro zone fixed income traders should keep sharp eye on European inflation indicators and commentaries from ECB and its vocal critique German Bundesbank. Euro is currently trading at 1.123, driven by bund yields.

(Source: http://www.fxwirepro.com/data/charts/20150512e30fc771yield%20return.jpg.jpg)


Title: Re: Inflation risk is higher in Euro zone than US
Post by: Amph on May 13, 2015, 07:22:31 AM
because i'm from euro i want to ask if

this mean that there are higher chances that the euro would collapse first ? if this happen do you expect a shattering of the european union? they will return to their old currencies or they adopt another strong ones?



Title: Re: Inflation risk is higher in Euro zone than US
Post by: unsoindovo on May 13, 2015, 12:26:54 PM
because i'm from euro i want to ask if

this mean that there are higher chances that the euro would collapse first ? if this happen do you expect a shattering of the european union? they will return to their old currencies or they adopt another strong ones?


euro will never collapse...
there are too many continents involved in to this business...
i mean EU debt
think to china, us, russian federations, japan...
a lot of countries are holding EU debt....
so, they will never do fail eu!


Title: Re: Inflation risk is higher in Euro zone than US
Post by: Troonetpt on May 13, 2015, 01:17:03 PM
Sure, Euro is on going QE, that means a lot of inflation.
And Us is going to add thier interest rate, which is another factor to push the US doller up.


Title: Re: Inflation risk is higher in Euro zone than US
Post by: pereira4 on May 13, 2015, 03:00:56 PM
Inflation is only for the superrich: Manhattan condos, luxury cars, yachts, private jets. The wages for the average have been flat, how could prices go up?


Title: Re: Inflation risk is higher in Euro zone than US
Post by: Jeremycoin on May 13, 2015, 03:44:53 PM
Is this affect to Bitcoin trading? If it yes, so what is better trading to with EUR or USD?


Title: Re: Inflation risk is higher in Euro zone than US
Post by: BobK71 on May 13, 2015, 04:25:13 PM
The main thing to remember is that the euro is the biggest competitor to the dollar for global reserve status.  There are many powerful reasons for the US and US elites to want to see the euro down.

You can never be sure of course, but the whole sovereign debt saga had a feeling of being a deliberate attack, even though there are real issues in the design of the euro system and in the financial pollution in the southern countries.