How is ECB action manipulating asset classes?

Cornelian's David Appleton outlines the impact of last month's package of ECB measures on currencies, bonds and equities.

Having had some time to digest the package of measures announced by ECB president Mario Draghi last month, it is worthwhile exploring the implications for asset allocation. The ECB's impact Firstly, interest rates have been explicitly anchored ‘lower for longer’ by the combination of cuts to short-term wholesale interest rates and a €400bn injection of ultra cheap, four-year funding to the banking system. In return, the banks must increase lending to the eurozone’s credit-starved SMEs, addressing a critical bottleneck in the monetary transmission mechanism. These policy actions ...