Will Draghi surprise?

Most of the sell-side thinks not…

from Zero Hedge by Tyler Durden

Goldman Sachs (Dirk Schumacher)

  • ECB to keep rates unchanged, Draghi will express confidence that package unveiled in March will help steer CPI toward target
  • Draghi also likely to express ECB’s willingness to respond if downside risks to growth and CPI materialize
  • Draghi will also clarify that further rate cuts remain part of monetary toolbox after his comments in March were interpreted by many as closing the door for further rate cuts
  • Some further details on new CSPP may be published
  • Expects CSPP to be conducted in similar fashion to covered bond and asset-backed securities program, and purchases to take place in primary and secondary market; ECB will decide in discretionary way how much corporate debt to buy
  • Expects an extension of APP to Sept. 2017 from March 2017 currently

JPMorgan (Greg Fuzesi)

  • No action expected this week; see next round of easing to focus on extending QE program beyond March 2017
  • Chances of further rate cuts may be higher than initially thought
  • ECB concerned about pressure of negative rates on banks and about fueling currency war; that said, incremental deposit-rate cuts still seem possible, as does a tiered reserve charging system; Draghi is likely to clarify the message around this at this week’s press conference

BofAML (Gilles Moec, Athanasios Vamvakidis)

  • Expect Draghi to defend ECB this week; he could also remind markets that QE is open-ended and won’t stop as long as ECB is missing CPI target
  • Draghi also likely to clarify that another depo-rate cut remains available
  • Expect Draghi to sound dovish but do not see a sustained market impact
  • More sustained EUR weakness requires a critical mass of strong U.S. data and stable global markets allowing Fed to sound more confident
  • Continue to forecast EUR/USD at parity by end-2016, expecting two Fed hikes this year

BNP Paribas (Ken Wattret)

  • ECB should reiterate this week that it stands ready to take action to deliver on price-stability mandate
  • While expect the door to be left more open to further cut in policy rates than during Q&A session on March, there is limited room for maneuver
  • CSPP details possible but may take longer
  • Expect ECB to follow the template used for current asset-backed security and covered-bond purchase programs, suggesting no specific numeric target for monthly volume of purchases, buying in both primary and secondary markets, and opting for risk sharing

Citigroup (Guillaume Menuet)

  • Don’t expect any new measure this week
  • Look for more policy measures in coming months including a refi rate cut by 5bp each in Sept., Dec. and March 2017
  • Also expect a QE extension by another 6 months in Sept., adjustment to issue/issuer limit for PSPP to ~40% and 10bp depo-rate cut in March next year

HSBC (Karen Ward)

  • Draghi to convey the message that ECB can still do more
  • During Q&A, expect questions related to progress with Greece and IMF and on what might happen to Portugal’s access to QE if DBRS downgrades the country on April 29
  • Expects Draghi’s answers to be elusive

UBS (Reinhard Cluse)

  • Expects a debate on limits of monetary policy, ‘helicopter money’, corporate bond purchases and credit conditions at this week meeting
  • Base-case scenario remains that ECB is “done” now and that it won’t add more stimulus over coming months

Morgan Stanley (Elga Bartsch)

  • It might be too early yet to get full formal details on planned buying of corporate debt under new CSPP
  • Don’t expect any additional policy measures before 3Q
  • Expect another depo-rate cut of 10bp in 2H and see a near even chance of ECB upping and extending QE

Natixis (Johannes Gareis)

  • Draghi likely to address recent EUR strength by downplaying comments made at March meeting that policy rates may already have reached the lower bound
  • More details about future corporate-bond purchases and TLTROs in focus this week
  • ECB will take a wait-and-see approach over coming months; from a long-term perspective, CPI might be too weak for ECB to remain on hold; the most likely easing step is an extension of QE program beyond March 2017

UniCredit (Marco Valli)

  • ECB’s focus remains on implementing several measures already announced; expect a strong, open-hearted defense of ECB policies
  • This week’s meeting is unlikely to generate a meaningful impact on euro
  • ECB is very likely to be unhappy with stronger EUR; however, there is not much Draghi can do about it, at least for now

Commerzbank (Bernhard Gruenaeugl)

  • Probably too early to add substantial detail on CSPP with still about two months to go before the actual start of the program
  • The question of whether insurance corporations’ seniors could be bought or not should remain a matter of lively debate for now

Credit Suisse (Peter Foley)

  • ECB is likely to leave the door open to additional policy measures in future if economic situation deteriorates

Nordea (Aureljia Augulyte)

  • Keep long EUR/USD
  • Market is pricing close to a full 10bps cut in year ahead, so EUR needs a really big surprise to get knocked

ABN Amro (Nick Kounis)

  • Focus in April meeting will be on details of corporate- bond scheme; ECB will probably reveal a relatively large eligible universe of ~EU750b
  • It would include traditional non-financial corporates as well as “financial corporations other than credit institutions”
  • In this category, there are many funding entities of normal corporates, real-estate corporates and insurers
  • Expects ECB to also include floating-rate notes, bonds that mature within 1 year and those with an amount outstanding less than EU500m

ING (Petr Krpata)

  • Negative impact on EUR should be very limited as any strong pre-commitment to further easing should be absent
  • It’s increasingly difficult for ECB to materially weaken EUR
  • Despite no real action, there would probably be some dovish comments, whereby ECB stresses downside risks to economic outlook

BBVA (Roberto Cobo Garcia)

  • Draghi will likely stress that ECB keeps the door open to adopt further easing measures if needed; he will probably remark that further rate cuts aren’t out of the table
  • Expect ECB meeting outcome to be negative for EUR; also expect more details on CSPP

Credit Agricole (Manuel Oliveri, Valentin Marinov)

  • ECB may not mention EUR but will keep the door wide open to more accommodation
  • While EUR may recover in immediate aftermath, the longer-term risks for currency should be on downside

Finally we note that EURUSD did drop quite notably today…though still remains considerably stronger post-March meeting…

“The euro has looked a bit vulnerable,” said Shaun Osborne, chief foreign-exchange strategist at Bank of Nova Scotia in Toronto. “There has been some speculative selling ahead of the ECB on the view that Draghi will not do anything tomorrow policy-wise but might sound dovish, and could open the door to lower rates again.”

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作者: alpha2233

Diverse experiences including production manager in JVS between China, Canada and Japan, a PR manager in SOE in Shenzhen, an I&E manager in SOE, a Vice general manager of Enterprises Administration and Supervision of public listed company, a GM for corporation improvement and operation, covering domestic M&A as well as oversea expansion. Profound business management expertise especially competent in investment,corporation finance and M&A. Cases include HER(AUX:HER),PEM(AUX:PEM) and AngloAmerica's Zinc& Lead division. Fluency in English, and Japanese apart from Cantonese and The Hakkas.

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