January was a fantastic month for bonds and equities. In the coming weeks, investors from all over the world will be paying intense attention to the world’s central banks for signs of continued easy money. A second bailout deal for debt crippled Greece will also be closely watched by investors. Investors are now adjusting to the fact that the global economy may be turning out to be better than expected, though it is still very fragile. Chief global equities strategist at Goldman Sachs, Peter Oppenheimer said that company predicted equity market to worsen in the first quarter before staging a burly recovery around quarter 2 at the weakest point of the economic cycle.
Adding further, he said that corporate earnings and activity are probable to be stagnant at best. On the other hand, Reserve Bank of America, the Bank of England and The European Central Bank are likely to hold a policy meeting during the week. The European Central Bank is most likely to cut its interest rates in the coming week. According to a Reuters reports, it is expected to linger until its March meeting to move its current record low of 1.0 percent down to 0.75 percent. Previously in September, the achievement of the European Central Bank’s 3 year lending operation has been a key factor in cheering the view that the bank will wait. In a statement, a director of European economic for Credit Suisse, Christel Aranda-Hassel said that the European Central Bank’s action in December prevented a key credit crunch.
Furthermore, a big amount of money will be injected into assets as a result of the next loan offerings. However, Aranda Hasel revealed that the real challenge for the European Central Banks is that credit conditions in the wider economy have not improved despite the fact that euro zone markets have improved as a result of cheap money. The Bank of England is likely to raise the amount it is pushing into the economy using assets purchases by nearly 50 billion pounds.
