The European Central Bank’s first mass injection of cheap money into the European banking system last December was hailed as a success from almost all sides. The results of the second round of Europe’s answer to quantitative easing , to be announced Wednesday, will be watched even more closely according to CNBC.
The first time around, the market underestimated how popular the three-year long-term refinancing operation (LTRO) would be — and how positive its effects could be — until traders returned to their desks after the Christmas break. With the second round, there are a number of key questions to ask before deciding how to play it.
How Big Will It Be? Forget everything you saw (or didn’/t see) in the High School locker room; size matters. Analysts’ estimates for the second round have gradually been reduced, with most now believing that it will be similar to the first operation of 489 billion euros ($654 billion). If the sum taken out is below 400 billion euros, this may also be viewed as positive, according to Peter Schaffrik, head of European interest rate strategy at Royal Bank of Canada, as it could indicate that banks do not need the new source of funding….
Find out more at http://www.cnbc.com/id/46542656
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