ECB Cuts Again, Spending Will Increase and Euro Yields Jump

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Just a quick subscriber note today guys, this morning we saw the ECB cut rates once again, which was widely expected. The ECB has now cut over 150BP thus far and has dropped the ECB Deposit rate by 37.5% from 4.00% to 2.50%. Germany’s bond yields jumped this week on news of the massive increase in expected spending due to the debt limit that was capped at 0.35% of GDP, whereas now the cap for annual net borrowing will move to 1.4% of GDP (adding €220bn).

So no wonder yields are popping there, but ultimately we believe Europe has bigger concerns considering France’s position on Russia/Ukraine and we don’t think France is in any fiscal position to be making any demands as their TARGET2 Balance is growing more and more negative by the day, now at -€212.42Bn!

Source: data.ecb.europa.eu

Anyway Christine Lagarde, said policy is now “less restrictive,” and it seems that inflation is not of real concern! Well German 10Y Yields are +50bp or so over the last 2 days hitting 2.90% which is 40bp above the Deposit Rate which represents a decent steepening move from its prior inversion.

When we speak of yield curves being positive or inverted, what we mean is the difference between the two. In this case we have the 10Y rate at 2.90% and the Deposit Rate at 2.50% which is +.40%, whereas before the last 2 days action the 10Y rate was 2.55% and the Deposit Rate was 2.75% which is a -0.20% inversion:

Domestically, we saw the Challenger job cuts data and boy, well, its not looking good:

Here is the Challenger longer term chart we saw posted on X from @GlobalMktObserv where you can see we are moving up to levels not seen since 2009:

Ok that is our story for the day, we will now move to our subscriber based data trackers and a look back at what transpired yesterday. Anyway hit that subscribe button, share our work and we hope you join the ranks of the informed here at Magnelibra Research and Trading, we know your knowledge and your mindset will forever be enhanced consciously and subconsciously!