Skip to content
Subscriber Only

Hawkish ECB Tapering Surprise to Give Bigger Jolt to Euro, Bunds

  • Euro may hit $1.20, bund yields climb to 2-year high: survey
  • Markets may react less under dovish scenario, strategists say
Video player cover image

Goldman's Garzarelli Sees Linear ECB Tapering to Zero

Updated on

A decision by the European Central Bank to limit monthly bond purchases to as little as 20 billion euros may jolt the euro and German bonds more than other potential tapering outcomes.

The common currency is likely to trade above $1.20 and bund yields could surge to the highest since 2015 under this hawkish scenario, which includes purchases continuing only for six months, according to Bloomberg surveys of strategists. A more gradual wind down of stimulus is expected to elicit more tempered moves in a market positioned for a relatively benign outcome. The calls highlight the uncertainty investors face at the ECB’s Oct. 26 meeting.