Tuesday, 10 September, 2019
ECB – Bank Views
-BAML: expect a 20bp cut to Depo rate, introduction of tiering, extension in forward guidance and relaunch of QE at €30bn p/m for 9 to 12 months. Also possible TLTRO terms could be improved.
-Barclays: expect a rate cut and relaunch of QE, esp. since Draghi will do whatever it takes to deliver a bold package before stepping down at the end of Oct.
-BNP: expect a 10bp Depo cut, keeping some powder dry in case EUR strengthenssignificantly. On QE, the ECB will launch a package of about €500bn or €60bn p/m for 9 months.
-Credit Agricole: expect re-launch of QE to attempt to lower sovereign, corporate and covered bond yields. Expect a QE program of 12 or 18 months, 80% PSPP at €30bn-35bn p/m, CSPP €3bn-4bn p/m and CBPP3 €2bn- €3bn p/m.
-Citi: expect a 10bp cut in Depo, likely with a tiered system and announcing a bias for lower rates if needed. Don’t expect any hikes out to at least 2022. Expect relaunch of QE for 12+ months for minimum €30bn p/m
-Commerzbank: Expect 20bp Depo cut with Draghi keen not to disappoint near the end of his term. Had called for €40bn p/m QE for 9 months but after recent ECB comments think QE could be de-emphasised in the package
-Danske: expect a 20bp Depo cut with tiering, extended forward guidance & restart of QE. Re: tiering expect allowing banks to Deposit 40% of their reserve requirements at the MRO rate and 60% at the Depo rate. On QE see €45bn-€60bn p/m for 12 months
-GS: expect a 20bp Depo cut, likely with tiering. QE at €30bn p/m for 9 months – there will be clear limits given recent speaker comments. Forward guidance could be boosted & tied more closely to inflation with an emphasis on symmetry
-ING: expect a 20bp Depo cut with “small” tiering, relaunch of QE at €30bn p/m and a repricing of TLTROs (possibly linking them to Depo rather than MRO rate). Risk of a delay in start of QE
-Lloyds: expect 10bp Depo cut with another 10bp cut in Dec. Also expect stronger forward guidance – either extending the date or linking to inflation or the QE duration. Relaunch of QE is “less certain” – may be delayed until Lagarde takes over from Draghi
-MS: expect a 10bp Depo cut (see a case for 20bp), introduction of tiering, reinforced forward guidance and launch of a new QE program of around €30bn p/m (lowered from initial estimate of €45bn) for 9 to 12 months. Risk QE announcement could be delayed after recent ECB comments (highlight Villeroy)
-NatWest: expect a 10bp Depo cut and QE – expect a €30bn/month for 6 month (€180bn total). Tiering is also likely to be introduced based on the Swiss model. PSPP limits to be increased to 50%.
-Nordea: expect a 10bp Depo cut with tiering, QE at €30bn p/m (issuer limit to rise to 49% from 33%) and strengthened fwd guidance with a stronger link to inflation. Note a rate cut is a done deal but QE more divisive
——————————————————————————-
This message may contain confidential or privileged information. If you are not
the intended recipient, please advise us immediately and delete this message.
The unauthorised use, disclosure, distribution and/or copying of this e-mail or
any information it contains is prohibited.
This information is not, and should not be construed as, a recommendation,
solicitation or offer to buy or sell any securities or related financial
products. This information does not constitute investment advice, does not
constitute a personal recommendation and has been prepared without regard to
the individual financial circumstances, needs or objectives of persons who
receive it.
