Because we definitely need more forward guidance….
As if it wasn’t already clear from everything we’ve seen in DM rates over the past several weeks that efforts to “telegraph” changes to monetary policy are doomed to create more confusion, the ECB is dropping more hints.
A week after WSJ reported that Draghi will be speaking at Jackson Hole, we get still another trial ballon from the ECB.
“The ECB’s Frankfurt-based staff are examining scenarios for the future path of quantitative easing ahead of a Governing Council decision that is expected to take place in September or later,” euro-area officials familiar with the matter say.
According to Bloomberg, the “ECB staff’s preliminary work, which will be refined in coming weeks, includes studying the announcement of a tapering path, an extension of asset purchases at a reduced pace, and hybrid strategies.”
Your guess is as good as mine as far what the fuck a “hybrid strategy” might mean.
For right now, the euro isn’t really reacting, but if you’re going to read into this, your take should be that it’s yet another bit of incremental news to suggest that something is coming this fall and as always, you need only look at a one-month chart of bund yields to know why that’s dangerous…
“The market reaction to Draghi’s speech last month in Sintra has made some policy makers more cautious,” three of the people Bloomberg cites said.
Expect markets to give this the Schäuble side eye…