16 Jan 2015
ECB: Expected key features of 22nd Jan meeting - TDS
FXStreet (Guatemala) - Analysts at TD Securities gave us their outlook and key features surrounding the ECB meeting on the 22nd Jan next week.
Key Quotes:
"We believe the key features of the ECB’s announcement will be:
"€500bn of sovereign debt, but delivered within the context that buying will be “at least” that much."
"Front-loaded purchases on EGBs, and we expect the pace announced will be closer to €40bn per month that would see that buying completed as soon as 12 months, rather than the €20bn pace that would take 24 months to complete."
"There will be some sort of risk sharing with NCBs but the crucial issue for markets is that this will not necessitate placing the ECB above existing creditors, so whether it is the ECB or NCB buying the bonds, we see this facet of the decision as more noise than substance."
"EGB buying will be across all Eurozone countries and not just AAA assets, with Greek and Cypriot government debt buying limited if non-existent outside of troika programs but we think the latter constraint will be relatively irrelevant to the broad market reaction."
"A broadening of the private sector buying program to include non-financial corporate debt is possible, but we think this feature remains a coin flip right now and could be excluded, but with minimal impact on the market reaction if the ECB delivers on our broader convictions."
Key Quotes:
"We believe the key features of the ECB’s announcement will be:
"€500bn of sovereign debt, but delivered within the context that buying will be “at least” that much."
"Front-loaded purchases on EGBs, and we expect the pace announced will be closer to €40bn per month that would see that buying completed as soon as 12 months, rather than the €20bn pace that would take 24 months to complete."
"There will be some sort of risk sharing with NCBs but the crucial issue for markets is that this will not necessitate placing the ECB above existing creditors, so whether it is the ECB or NCB buying the bonds, we see this facet of the decision as more noise than substance."
"EGB buying will be across all Eurozone countries and not just AAA assets, with Greek and Cypriot government debt buying limited if non-existent outside of troika programs but we think the latter constraint will be relatively irrelevant to the broad market reaction."
"A broadening of the private sector buying program to include non-financial corporate debt is possible, but we think this feature remains a coin flip right now and could be excluded, but with minimal impact on the market reaction if the ECB delivers on our broader convictions."