Draghi/ECB Sets Stage for Unlimited Sterilized Bond Purchases

Today’s news is ahead of the key European Central Bank meeting. It is expected as of now that the ECB will trim rates by 0.25%, but today’s news may or may not alter or influence the formal policy changes.

Keep in mind that Janney was out with a note just yesterday calling for a disappointing ECB stage. One note stood out:

There’s a great deal of pressure on the central bank to do something, and we believe Draghi will cut the benchmark rate 25bps, but not execute on sovereign purchases. Much of the reason stems from a Sept. 12 scheduled German court decision on the constitutionality of the ESM/EFSF bailout mechanisms. Out of (reasonable) self interest, the ECB doesn’t want to start buying sovereign debt, only to have the rug pulled out from under it.

JON C. OGG