In a bout of intense volatility, the euro swung from a sharp gain to a steep decline Thursday after the European Central Bank said it would begin tapering its massive monthly bond-buying program in April. In the minutes after the announcement, the EURO rose 0.7% to $1.0874, its highest level since Nov. 14. But it soon turned lower, falling more than 1% to a three-day low of $1.0663, as investors realized that the statement contained a mixed message of continued stimulus but at a lower level, which was viewed as both dovish and hawkish.
In economic news: A report on U.S. weekly unemployment showed that jobless claims dropped by 10,000 to 258,000, matching forecasts and extending a streak of claims below 300,000. The report continues a trend that points to a healthier labor market.
The bond market is clearly pricing in the idea that infrastructure spending, tax cuts, rising deficits, immigration restrictions and protectionist policies are here to stay. The selloff in the bond market, resulting in surging yields and rates may be evidence that inflation is coming.
Serving the West Side first, I am Mike Elerath of BR Capital for 1360 KUIK.
