Draghi Delays Glimpse Into Tapering Plans
European Central Bank President Mario Draghi said nothing new about plans to adjust the bank's bond buying program Thursday morning. Investors anticipate the ECB will start tapering next year, but Draghi offered only that he might say more in October.
"We'll have to wait until October 26th before we get details on the ECB's plans for QE in 2018 but a taper is still most likely," says Peter Boockvar of The Lindsey Group. He added, "He was so vague on the discussion about different scenarios with what the QE process will follow from here and didn't tip his hand at all."
In fact, Draghi said the ECB would boost the size and duration of quantitative easing if needed. Inflation is still running well below the ECB's target. Its inflation outlook was lowered to 1.2%.
"The Euro likes the lack of detail and the dollar remains under pressure," notes Ian Lyngen and Aaron Kohli of BMO Capital Markets.
A rising euro is a problem for Draghi's hopes of spurring more inflation in Europe.
Aberdeen Standard Investments' Patrick O'Donnell comments:
There's no question that the ECB is worried about the euro's appreciation but there's little he can actually do about it. That's why the euro has rallied based on what Draghi has said: markets know there's only so much he can say... Unfortunately for Draghi, with the dollar and sterling remaining relatively unloved, the euro will keep going up.
Treasuries rallied after Draghi's comments. The yield on on the 10-year note fell to 2.05% by 10:30 a.m. ET, according to Tradeweb, a rapid six basis point decline to a new low for this year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.