The ECB’s impossible task and an ESG regulatory riddle

Send us Fan MailLast week the ECB laid out its plans for its monetary policy. That surely was enough to convince bond markets that it had a grip on both rampant inflation and government bond spreads, right? Wrong.This week it had to convene an unscheduled meeting of its governing council so that it could figure out how to manage spreads in the government bond market. Dealing with inflation is the bank’s core mission; dealing with spreads is something it has had to take on during many years of crisis. In some ways, the two objectives are mutually exclusive. So we discuss what the ECB is up to and what the consequences will be.We also talk about the much more immediate consequences of the US Federal Reserve’s historic 75bp rise for emerging market bond issuers. Their market is shut but will that lead to financing problems for a number of economically vulnerable countries?We also dissect what incoming EU regulations that demand investment firms get a read on what their clients’ sustainability ambitions might be for their portfolios mean for the asset management industry. This is a huge piece of rule making that will require a mountain of work on the buy-side and it is due to come into force in August. But the industry appears to be far from ready to deal with it.