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Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

ECB Holds Rates, Hawkish Tone Confirms Rise on The Way [Reuters]

Summary: The European Central Bank left its interest rate unchanged at 3.25%, but sent a hawkish signal that a quarter-point rate hike will come next month, as well a possibility for further hikes next year. ECB President Jean-Claude Trichet declined to give '07 guidance but his emphasis on "strong vigilance" gave market participants the impression that there will be more rate hikes. Global-Central-Bank-Rates-110306 European stocks were sold as a result, and the euro gained against the dollar. Trichet commented that economic growth in the euro zone seems it will maintain its momentum in the second-half of this year, but probably won't match the "exceptional" growth rate in the first-half. The ECB has a goal of keeping inflation under 2%, although Trichet is doubtful for 2006 and '07, but says he is hopeful for '08. Next month, the ECB will publish updated forecasts for 2007 and its first for '08.
Related links: ECB: Monetary policy decisions press release and Jean-Claude Trichet: Introductory statement with Q&A • WSJ: European Bank Holds Key Rates But Hints at RiseFed Decision, Notable Changes, and Economist ReactionsWeak Core CPI Keeps Pressure on BoJ to Hold RatesWhich Currency ETF is the Best Hedge Against the Dollar?Fed Officials Disagree, But Number of Hawks Growing
Related ETFs: iShares Lehman TIPS Bond (TIP) • iShares Lehman 1-3 Year Treasury Bond (SHY) • iShares Lehman 7-10 Yr Treasury Bond (IEF) • iShares Lehman 20+ Year Treas Bond (TLT)

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Source: ECB Holds at 3.25%, But Trichet's Tone Signals Further Hikes