It’s not a secret the cheap debt policy from the European Central Bank has really helped out several European countries to keep the government finances under control. Well, more or less, as several members of the Eurozone are still running huge budget deficits.
Source: European Commission
Via Michael Shedlock of MishTalk.com,
Eurozone headline inflation hit two percent this week, and that has the inflation hawks in Germany screaming.
Yet, ECB president Mario Draghi has promised to maintain QE asset purchases, and Italy has no other real buyer for its bonds.
What’s Draghi to do?
Headline Inflation Hits Two Percent
A milestone.
The currency markets are signalling that a massive shift might be about to happen.
According to a Bank of America/ Merrill Lynch fund manager survey, the US Dollar ($USD) is the single most crowded trade on the planet.
In a fiat world, the value of a given currency is based on where it trades relative to other currencies. In the case of the $USD, the Euro comprises 56% of the basket of currencies against which the $USD is valued.
Put another way, whatever happens to the Euro will effectively trigger an inverse reaction in the $USD.
Following a series of "hot" inflation prints from Germany's states, moments ago German inflation rose more than expected, printing at 2.2% above the 2.1% consensus estimate, up from 1.9% in January and surpassing the ECB's target of a rate just under 2 percent for the first time since August 2012, the peak of the Eurozone debt crisis.
With Germany headed for federal elections in September, the inflation figures will add more fuel to the debate about an end to the European Central Bank's loose monetary policy.
Submitted by Mike Shedlock via MishTalk.com,
Eurozone Target2 imbalances have touched or exceeded the crisis levels hit in 2012 when Greece was on the verge of leaving the Eurozone. Others have noted the growing imbalances as well.
I had a couple of questions for the ECB regarding Target2, which they have answered, I believe disingenuously.