ECB Taper ‘Feasible’, Would Push 10y Bund Yield to ~0.30%: Citi
(Bloomberg) -- Had already been thinking that a 6-month QE extension would be difficult for ECB to execute, and believe some form of taper is “feasible”, Citi strategists including Harvinder Sian write in client note.
- Bloomberg news story on ECB having tapering option on the table underlines that achieving consensus on the Council will be tough, and hawks will extract something from the December decision
- ECB hawks, some centrists may be emboldened by 2019 staff projections, which will show HICP close to 2%; given 2019 projections will be published at Dec. meeting adds a bearish backdrop
- Some form of re-calibration of PSPP size is feasible, alongside a 6-month timetable extension; this could be a pace reduction from EU80b to the previous E60b or perhaps lower
- Market would view change in QE as tapering, bringing forward timing of first hike as real rates move higher, this would therefore be a “policy error”
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
Tickers 2539Z GR (European Central Bank)
People Harvinder Sian (Citigroup Inc)
To de-activate this alert, click
hereUUID: 7947283