The ECB and what it means for markets

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UBS House View Chief Investment Office WM Weekly

Tapering has become synonymous with market tantrums. But Draghi's skillful reduction in monetary stimulus shows this needn't be the case. The ECB president managed to present hawkish action – halving the pace of bond purchases to EUR 30bn – while sounding dovish. Careful communication and the steady pace of easing means we believe global and Eurozone equities can continue to grind higher. And some other market opportunities also stand out. Notably, we expect tapering to be negative for EUR high yield bonds, where the effective yield is close to a record low of 2.15%, just above the 2.07% yield on a five-year US Treasury