Euro zone bond yields fall as the prospect of an imminent U.S. rate hike failed to shake investor confidence that the ECB is just weeks away from announcing further stimulus. Minutes from the last ECB policy meeting offer indications on their next move. David Pollard reports
Euro zone inflation perked up in October. But it's positive by only the smallest margin - shrinking prices persistently dogging a rebound. (SOUNDBITE) (English) DAVID BUIK, MARKET COMMENTATOR, PANMURE GORDON, SAYING: "The recovery process in Europe is pretty weak ... Obviously a weak euro's going to help the recovery process with exports, particularly Germany, which stands in a very strong position, despite the problems they've had with Volkswagen. The southern part of Europe - Spain has seen quite a strong recovery, and it's visible, you can see it, but it's still very weak." As is France, even before the latest attacks in Paris. Panmure Gordon's David Buik is not alone in seeing the ECB adding more cheap money as a boost to the euro zone. In his case, not ruling out the possibility of another 900 million euros added to an already massive QE programme. The noises made in the latest ECB minutes support at least something happening next month. The risk that the ECB will miss its inflation target of around 2% is on the up. Current policy measure may not be sufficient, they say. And other factors - like a lack of reform - aren't helping either. By contrast, the Fed will hike next month - but may proceed more slowly afterwards. That the message drawn from Wednesday's US central bank's minutes. (SOUNDBITE) (English) DAVID BUIK, MARKET COMMENTATOR, PANMURE GORDON, SAYING: "Put rates up ... and then they can go to sleep for a year. It doesn't matter - because if it's wrong, they can bring it back up again. And if the economy is actually improving all the way around the world, then they can carry on very slowly putting rates up." The Fed meets on December 15th. The ECB has less time to mull its options - its December policy decision now just two weeks away.