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Is the ECB’s quantitative easing program on the ropes?

At a March 8 press conference following the ECB’s monetary policy meeting, President Mario Draghi revealed that the central bank will no longer step in and increase bond purchases in the event of an economic downturn, Eitelman said. “The ECB specifically removed this piece of guidance from its quantitative easing (QE) program, due to the continued improvement in economic growth and employment across the eurozone,” he stated, adding that Draghi also emphasized the need for the bank to maintain some level of monetary stimulus to move toward its 2% inflation target.

“Draghi very carefully threaded the needle here, pulling off a delicate balancing act,” Eitelman remarked. Essentially, in his viewpoint, the central bank is signaling that it’s gradually removing its accommodative monetary policy measures—at a measured pace that markets are prepared for. Equity markets reacted positively to Draghi’s comments, he noted, with the Euro STOXX 50® Index closing 3% higher on March 8 than the previous day.

U.S. February employment report shines

U.S. payroll data for February was released by the Bureau of Labor Statistics on March 9, Eitelman said—and the results were a huge positive surprise. The nation created 313,000 new jobs last month, he said, far-and-away beating consensus expectations for 200,000 job additions. Wage inflation was on the softer side, with a 2.6% year-over-year increase, Eitelman noted—a decline from the 2.9% increase in January that helped spark the Feb. 5 market sell-off. “In a nutshell, today’s employment report points to a Goldilocks economy in the U.S. for investors, with strong job growth and not a lot of evidence of inflation,” he said. This was a big positive from a market perspective, Eitelman added, as evidenced by the S&P 500® Index, which was up roughly 1% mid-day on March 9 from its previous close.