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Draghi Could Expand On The OMT framework

ByDanske Markets
Published 07/04/2013, 07:56 AM
Updated 05/14/2017, 06:45 AM

The ECB rate decision (13:45 CET) and the subsequent press conference (14:30 CET) are the highlights for today. Policy rates are widely expected to stay on hold, but ECB President Draghi may intervene verbally at the press conference, potentially talking down market rates. Moreover, Draghi might provide more formal forward guidance and could expand on the OMT framework. Given the recent political crisis and resulting market turmoil, any comments on Portugal will also be closely followed.

We expect the Bank of England to opt for status quo in connection with today's announcement (13:00 CET), and consequently we do not expect a statement to be released. However, this will be the first MPC meeting with Mark Carney as governor and a deviation from usual practice is possible, even if policy is unchanged.

Focus will also be on Egypt, after the army ousted President Morsi yesterday. The likely market impact is a further rise in the geopolitical risk premium on oil.

The political crisis in Portugal will stay in focus, though there were signs of reconciliation yesterday and it seems that the CDS party will remain in the coalition.

There is supply from Spain and France In the government bond market (at 10:30 and 10:50 CET, respectively). We expect the Spanish auction to draw solid demand, given the recent uptick in yields and the short maturities (3 and 5 years) being tapped. France is tapping in the 10- and 14-year segment. We expect demand for the former to be particularly strong, as it is still trading expensively in the repo market.

There are no relevant scheduled events in Scandinavia today.

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