Halister News

(Bloomberg) -- Draghi will likely focus on general macro/monetary outlook and will probably remind that rates and asset purchases remain key elements of toolkit at tomorrow’s meeting, Andrew Bosomworth, portfolio manager at Pimco, says in e-mailed comments.

• Expects ECB to give details on CSPP in June
• ECB unlikely to treat “helicopter money” as a serious policy alternative any time soon
  • A rate cut to -0.5%, expanded QE in terms of size, duration, composition of assets as well as changes to capital key-based distribution of QE purchases are more likely than helicopter money
• See a “good 50:50 chance” of additional easing in late 2016 or early 2017
  • Eonia forwards priced down to -0.45% by 4Q 2016/1Q 2017, implying 10bp rate cut to -0.5% on deposit facility; this would likely be accompanied by an MRO rate cut to -0.1% and expanded QE; too early to say if this will happen
• NOTE: Fidelity says Draghi Unlikely to Weaken EUR, Will Keep March Message
• NOTE: Preview: Euro Impact Limited as Draghi May Defend Policies