We think that a moderate rate hike in December looks more and more certain.
It will be interesting to see how markets will digest this quasi-certainty in the coming days.
The committee is questioning what Mr. Draghi will do (or tell) on the 3rd December. Our feeling is mixed, on one hand, he might do nothing, because it is not necessary as the Euro weakened enough. On the other hand, markets could show big disappointment if Draghi doesn’t announce something concrete.
Also there is a potential threat that the Americans will not tolerate a too strong USD, and could intervene in the forex market (and blame it on the Chinese).
Overall, we are not bullish but we all agree that markets are in a momentum play, so that we can stay invested in equities at current level, at least until the ECB December meeting.
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