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3 Mar 2015
Market awaits clarification on QE details - BAML
FXStreet (Guatemala) - Analysts at Bank of America Merrill Lynch explained that
Thursday's debate is likely to focus on the QE technicalities.
Key Quotes:
"Key for us is how far into negative territory the ECB will buy."
"Significant opportunities still exist in the rates space, with 2y1y Eonia, Bund ASWs and peripheral spreads still attractive."
"We do not expect significant FX implications from the meeting, with flows and Fed expectations more important Euro drivers."
"With QE announced and pre-committed until Sep-16, suspense on ECB policy should be minimal (for a while at least). From spring 2016 onward, we are likely to once again start scrutinizing whether the programme will continue after September."
"However, in the meantime the debate is likely to focus on the technicalities of QE; if and how the central bank manages to deliver on its pledge to purchase EUR60bn of securities every month. It is from this point of view that next Thursday's meeting will be important."
"Indeed, many questions are still unanswered. A key issue for us is how far in negative territory theECB is ready to get in terms of yields to purchase government bonds? Last month, Draghi said that they could buy negative yielding assets, but there may be an explicit or implicit threshold at -20bp (equal to the deposit rate, i.e., the rate at which the ECB fund themselves)."
Thursday's debate is likely to focus on the QE technicalities.
Key Quotes:
"Key for us is how far into negative territory the ECB will buy."
"Significant opportunities still exist in the rates space, with 2y1y Eonia, Bund ASWs and peripheral spreads still attractive."
"We do not expect significant FX implications from the meeting, with flows and Fed expectations more important Euro drivers."
"With QE announced and pre-committed until Sep-16, suspense on ECB policy should be minimal (for a while at least). From spring 2016 onward, we are likely to once again start scrutinizing whether the programme will continue after September."
"However, in the meantime the debate is likely to focus on the technicalities of QE; if and how the central bank manages to deliver on its pledge to purchase EUR60bn of securities every month. It is from this point of view that next Thursday's meeting will be important."
"Indeed, many questions are still unanswered. A key issue for us is how far in negative territory theECB is ready to get in terms of yields to purchase government bonds? Last month, Draghi said that they could buy negative yielding assets, but there may be an explicit or implicit threshold at -20bp (equal to the deposit rate, i.e., the rate at which the ECB fund themselves)."