19 Jan 2015
ECB to deliver 'at least' €500bn of sovereign debt purchases - TDS
FXStreet (Bali) - The FX Team at TDS believes the ECB will deliver sovereign QE this month, noting that €500bn of sovereign debt will be purchased, but delivered within the context that buying will be “at least” that much.
Key Quotes
"There is clearly a lot riding on the ECB delivering QE in January and we believe they will deliver. Moreover, the risks are clearly biased to them doing more, or more likely, doing it faster."
"Consensus is clustered with the expectation of €500bn of sovereign bond buying, with the default that this takes place over two years. So that would merely meet expectations, and given market positioning, could even provide disappointment particularly in fixed income markets, if that is the only commitment."
"That disappointment could worsen if there is a significant risk-sharing announced with national central banks, or worse, the €500bn is announced as an “up to” amount with discretion provided to National Central Banks to buy less, rather than a pledge of “at least.”
Key Quotes
"There is clearly a lot riding on the ECB delivering QE in January and we believe they will deliver. Moreover, the risks are clearly biased to them doing more, or more likely, doing it faster."
"Consensus is clustered with the expectation of €500bn of sovereign bond buying, with the default that this takes place over two years. So that would merely meet expectations, and given market positioning, could even provide disappointment particularly in fixed income markets, if that is the only commitment."
"That disappointment could worsen if there is a significant risk-sharing announced with national central banks, or worse, the €500bn is announced as an “up to” amount with discretion provided to National Central Banks to buy less, rather than a pledge of “at least.”