ECB QE could theoretically surpass €2 trillion according to reported program details - page 11

[thenews]

ECB's Constancio sees signs of weak demand Dovish comments from Constancio in Berlin:

• Declines in oil prices, the combination of low inflation and low growth essentially point to a lack of demand holding back the recovery
• The asset purchase programmes will keep our balance sheet expanding until we see a sustained adjustment in the path of inflation
• ECB is closely monitoring developments and stands ready to act with all available instruments to deliver on its mandate
• Monetary policy needs to be accompanied by additional policy, with a differentiated set of instruments , in order to ensure financial stability
• We are still far away from a situation of excessive credit growth and price misalignments

Translation: We're printing, you deal with the consequences.

source

[thenews]

Draghi says the ECB will do what is needed to keep inflation target on track Reuters reporting comments from ECB boss Mario Draghi in an interview with Il Sole 24 Ore published this morning

• ECB is ready to do whatever it takes to keep mid-term inflation target on course

"If we are convinced our medium-term inflation target is at risk, we will take all the actions necessary.We will see if further stimulus is needed. The question is open."

He said inflation in the Eurozone was expected to remain close to zero, if not negative, at least until the beginning of next year.

"Starting from the middle of next year and through all 2017, thanks also to the delayed effect of exchange rate depreciation, we expect inflation to gradually increase"

Asked about what other monetary tools the ECB could use, Draghi said the bank already had an impressive set of monetary policy instruments at its disposal.

"It is however too early to say... 'this is the catalogue' and that there are no more"

In reply to a question on whether a cut in the deposit rate was a tool that could be used together with changes to quantitative easing policies, Draghi said it was "premature to make this evaluation".

He said there was no direct link between what the ECB did and what the U.S. Federal Reserve did.

Draghi backing up his comments made at the last ECB meeting and this can only add pressure to the already wobbling euro even if he doesn't have the full backing of his governing council

Reuters has more here

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[thenews]

EU Preview: Countdown to December ECB Meet II. The European Central Bank (ECB) and the whole euro zone will wait for final October PMI data due on Monday and Wednesday. Flash figures suggested that business activity had risen more than expected last month, led by Germany and France. However, there haven't been signs of healthy price increases.

Markit's Composite Flash Purchasing Managers' Index for the whole euro zone came in at 54.0 in October, an increase from September's 53.6 and exceeding forecasts. While some of euro zone's economic progress came from companies forced to cut prices further, the discounting helped the overall services PMI to climb to 54.2 from an earlier 53.7. An index figure resulting from manufacturers' survey held steady at 52.0.

Most of the individual member countries fared well, too, including private sector activity in France, hopefully leaving behind its period of sluggish growth.

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[thenews]

ECB Villeroy says ECB policy produced results Interview in Les Echos ECB's Villeroy's (new governor of the Banque of France) comments in an interview with Les Echos and says:

• French economy is not growing fast enough.
• French growth to be slightly above 1% 2015
• France recovery is consumer led. Business leaders have yet been confident to increase business investments.
• In favor of European budget committee.
• December easing depends on serious analysis.
• There is a strong commitment to active monetary policy
• ECB avoided deflation despite lower oil and commodities and inflation expectations are higher even if they are still too far from the targeted goal.
• The exchange rates is not a target we assign. It is an element that goes into ECBs analysis of inflation.

[thenews]

September 2015 Eurozone PPI -0.3% vs -0.5% exp m/m Details of the September 2015 Eurozone PPI data report 4 November 2015

• Prior -0.8%
• -3.1% vs -3.3% exp. Prior -2.6%
• EU28 states -0.3% vs -0.9% prior m/m
• -3.8% v s-3.4% prior y/y

[thenews]

ECB's Weidmann: Fed on path towards monetary policy tightening, ECB is not European Central Bank governing council member and head of Germany's central bank, the Bundesbank, Jens Weidmann, speaking on the weekend

• "The monetary policy of the euro system does not ride on the coattails of the Fed"
• Only when the economic recovery in the euro zone makes further progress and prices move upwards more strongly can the base rate in the euro zone be raised again"
• The Fed is on a path towards monetary policy tightening; the ECB is not for the foreseeable future. This is not going to change either in December."

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When you hear someone talking about divergent monetary policy , this is what they mean: :The Fed is on a path towards monetary policy tightening; the ECB is not for the foreseeable future"

[thenews]

ECB looking at deposit rate cut for their move in Dec - Livesquawk Livesquawk noting a "sources" story doing the rounds

• Consensus is forming around a rate cut
• Current debate is over size of cut
• Around 20 proposals are under consideration

Reuters have the story. They say some sources are saying that the deposit rate cut should be larger than the 0.1% expected by the market. The preference for a move on rates is seen as the easier choice while they discuss whether to increase QE

It's likely the ECB do go with a rate move as QE was a hard sell in the first place and will be a doubly hard re-sell to many

[thenews]

ECB's Draghi says priority is completing banking union That gives you a gist of things to come ZZZzzzz

• Union is a fully equipped single resolution mechanism and a uniform deposit insurance scheme
• Cross border markets need governance to be truly free
• ECB-BOE initiative on ABS an example of good governance

These comments are the pre-release text of his speech

[thenews]

ECB examines possible extension of QE purchases to municipal bonds - Sources

EURUSD falls on the Reuters headline

• ECB examines extra money printing as economy stays slow
• municipal bonds could be added to shopping list
• move could help Germany, boost slack Italy and Spain

The article - attributed to sources - says the ECB is "examining" whether to buy municipal bonds of "cities such as Paris or regions like Bavaria". It says that the buying can be "one in a series of measures to be rolled out in coming months". It does say, that time is short to implement in December and that it would likely come by March 2016.

The mention of paving the way for more QE, has sent the EURUSD lower. The pair fell back down to the lows for the day at the 1.0706 area. The 1.07000 remains a key support level to get to and through for the bears. The price rebounded quickly back to 1.0725 and settled a bit. Needless to say the markets remain nervous.

[thenews]

The ECB is reportedly thinking about buying municipal bonds as part of its massive QE plan The European Central Bank is reportedly thinking about buying municipal debt as part of its massive quantitative easing plan.

According to a report from Reuters, the ECB is thinking about buying debt from municipalities and regions in the eurozone, expanding the scope of its asset purchase program beyond sovereign debt.

Following this report, the euro was little changed, trading near $1.074 to the dollar.

Last month, ECB president Mario Draghi hinted that more QE was coming from the ECB, which is currently buying €60 billion worth of assets each month until at least next September.

Following Draghi's hints, Peter Praet, the ECB's chief economist, said that there were "no taboos" in terms of what the bank could and could not consider buying as part of its program.

With this report, it seems that buying debt from smaller entities like cities and regions is now part of the ECB's discussion. This additional expansion from the ECB into buying municipal-level debt wouldn't be likely until March, according to Reuters.

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