Fear of an End to Easy Money Prompts Sell-Off<br />Stock markets in the United States have hit highs and, for quite awhile, the interest rates on trillions of dollars’ worth of European government<br />bonds dipped into negative territory as global investors piled into these securities, confident that the central bank would continue to buy.<br />But in calling for prudence in policy, Mr. Draghi — who, more than any other central banker, is known for his judicious choice of words — sparked an immediate sell-off in<br />European government bonds as investors interpreted his use of the word “prudence” as a stepping away from the bank’s commitment to keep buying European government bonds.<br />By LANDON THOMAS Jr. JUNE 29, 2017<br />Fears that central banks would unwind years of easy money policies rattled global markets on Thursday,<br />prompting a sharp sell-off in European stocks and technology companies in the United States.<br />Even though an actual rate increase was years away, stocks<br />and bonds in emerging markets, long dependent on interest-rate sensitive capital flows, fell sharply in what would become a three-year bear market for the asset class.<br />Taken aback by the rout, central bank officials quickly said<br />that the speech should not be seen as a statement by Mr. Draghi that he would tighten policy immediately, but investors paid them little heed.
