Follow the Growth Flow
The market will likely increase its pricing of an ECB rate cut in the run up to the May policy meeting. A weaker euro can also be expected, but for a credit- and funding- starved Eurozone, fears over further capital flight due to return erosion may turn out to be misplaced. Politics notwithstanding, a rate-cut, further attentiveness to growth policies (on a monetary and political level) and a weaker euro may prove to be the perfect mix to reinvigorate investor interest on a structural basis, and these longer-term value driven flows into European asset markets are exactly the type the Eurozone seeks.
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