Negative Rates: Four Real World Experiences
- Sluggish growth, low inflation led to adoption of negative rates.
- Four central banks, including ECB and BoJ, cut rates below zero.
- The goal was to increase credit flow, exports, consumer spending.
- FX markets considered negative rates monetary tightening.
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Europe’s Calm FX, Bond Markets Masking Anxiety?
- European FX, bond markets have been calm despite economic fallout.
- Implied volatility in EURUSD at-the-money options spiked briefly in March.
- There has been active buying of out-of-the-money put and call options.
- Purchases reflect concerns over likely extreme moves in the euro.
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