20 Ways Central Banks Move The Markets

Central banking is at a historic crossroads.

All of the developed world's biggest central banks continue to pursue loose monetary policy in a long-running bid to stimulate economies still struggling to move past the effects of the financial crisis that began five years ago.

Two of those central banks – the Federal Reserve and the ECB – have recently unveiled programs that have been particularly notable for global markets. Both have pledged unlimited intervention in government bond markets (although, unlike that of the Fed, ECB intervention comes with conditionality).

The question becomes: how do markets react to such an unprecedented situation?

Societe Generale strategist Patrick Legland put together a big chartbook to shed some light on this question in a recent report titled Fed vs. ECB: 20 charts to show how Central Bank policy impacts asset prices. In 20 charts, Legland succinctly illustrates the effects – and limitations – of unconventional monetary policy when it comes to markets and the economy.

Thanks to Societe Generale for letting us feature their charts.

Additional monetary easing gives stocks less and less of a boost

Yet the ECB's announcement of its OMT bond-buying program has boosted stocks more than past interventions

And the rally started even before that, when Draghi said the ECB stood ready to do "whatever it takes to save the euro"

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