What’s Next for Europe

The ECB’s recent announcement that it will lower interest rates to 0.25% provides even more of a catalyst for Eurozone pan-European equities and fixed income. However, there are reasons to be cautious with pan-European equities. Russ K noted earlier this fall that while the situation in the region is beginning to show signs of improvement, risks still remain. As for interest rate adjustments and the resulting positive impact on fixed income, we believe that the ECB will hold off on increasing rates until long after the Fed starts to pull back on its easy money policy.

 

Dodd Kittsley, CFA, is the Global Head of ETP Research for BlackRock and a regular contributor to the The Blog. You can find more of his posts here.

Sources: BlackRock, Bloomberg, Eurostat, Bank of Spain, UK Office for National Statistics, Reuters

In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Securities focusing on a single country may exhibit higher volatility.