Halister News

(Bloomberg) -- Combination of QE extension and tapering signals a “longer but slower” trajectory for ECB and indicates the bank won’t raise rates before 2019, Evercore ISI’s Krishna Guha writes in note.

• New forward guidance pushing back hikes that got “pulled in” after Trump election win and keeping front end of bund curve down
• Nine-month extension of QE “puts the ECB on autopilot” through all European elections in 2017
• Evercore expects ECB to stick with the same national allocation of QE budget but buy few bunds at front end when yields are low
  • Will instead buy bunds later with higher yields to “maintain long-run fidelity to capital key”