Recap 2015-01-22


So the ECB surprised, but it didn’t. 60bn per month rather than 50bn, but 12% of that will be purchases of European institutions, rather than sovereigns. So the 20% risk sharing figure Draghi mentioned in a bit misleading, since the European institutions are already backed by the sovereigns. The 18 month duration is somewhat more than expected. Also the purchases of debt out to 30 years is a positive, as some thought they would be limited to 10 years and shorter. The open ended nature of the program may seem like a dovish surprise, but is actually a double edged sword. It is conceivable that a combination of better growth data and fiscal intransigence by periphery governments result in a termination of the program Sept. 2016. In aggregate, however, it is clearly a bigger and maybe better program than expected, depending on how you define ‘better.’

Great table here from CA’s Frederik Ducrozet ‏@fwred:

Interesting: <<< The video is so cool


  • ECB: it decided to launch an expanded asset purchase programme, encompassing the existing purchase programmes for asset-backed securities and covered bonds. Under this expanded programme, the combined monthly purchases of public and private sector securities will amount to €60 billion. They are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term. In March 2015 the Eurosystem will start to purchase euro-denominated investment-grade securities issued by euro area governments and agencies and European institutions in the secondary market. The purchases of securities issued by euro area governments and agencies will be based on the Eurosystem NCBs’ shares in the ECB’s capital key. Some additional eligibility criteria will be applied in the case of countries under an EU/IMF adjustment programme… With regard to the sharing of hypothetical losses, the Governing Council decided that purchases of securities of European institutions (which will be 12% of the additional asset purchases, and which will be purchased by NCBs) will be subject to loss sharing. The rest of the NCBs’ additional asset purchases will not be subject to loss sharing. The ECB will hold 8% of the additional asset purchases. This implies that 20% of the additional asset purchases will be subject to a regime of risk sharing… today’s decisions will support our forward guidance on the key ECB interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies… Maturities of purchased securities range between two and thirty years… A large majority was in favour of taking measures now
  • EU Consumer Confidence improved to -8.5 vs -10.5 exp and -10.9 prev
  • US Jobless Claims declined to 307k vs 300k exp
  • DOE Oil Inventories jumped 10,071k barrels vs just +2670k exp
  • NZ PMI improved to 57.7 vs 55.2 prev


  • Thu: Japan PMI, China HSBC PMI
  • Fri: EU Mfg & Services PMI, Carney Speaks, Chicago Fed National Activity Indicator, Canada CPI, Retail Sales, US Markit Mfg PMI, Existing Home Sales
  • Mon: BoJ Minutes, German IFO, DallasFed, Australia NAB Business Confidence,
  • Tue: UK 4Q GDP, US DGO, Case Shiller HPI, New Home Sales, Consumer Confidence, Australia CPI
  • Wed: German GfK Consumer Confidence, French Consumer Confidence, FOMC, RBNZ, Japan Retail Sales, UK House Prices
  • Thu: German Unemployment, CPI, Italy Consumer Confidence, UK Jobless Claims, Pending Home Sales, Japan Jobless Rate, CPI, UK Consumer Confidence