The kneejerk short covering reaction to Draghi's remark that he will do "anything to preserve the euro" (this must be news because yesterday the ECB would not do anything to preserve the euro supposedly) is over. Now the analysis begins of what was actually said. The realization is... nothing. From Bloomberg:
- ‘Nothing Structural’ in Post-Draghi Bond Spread Moves: Credit Agricole
- While selloff in bunds may extend further, it appears to be just “correction” of what is risk- averse bull rally, Credit Agricole fixed income strategist Peter Chatwell says in interview.
- The inverse is still case for periphery; says “we’re still in a regime of elevated peripheral yields” and difficulty in those markets
- Draghi remarks on ECB readiness to act “deliberately ambiguous,” clearly in response to market volatility and distress
- In being so ambiguous, comments are “slightly threatening” for investors short the periphery; could be hinting at further easing, rate cuts, or something “much more bold”
And now the countdown to the halflife begins. Typically cases such as this where the ECB leaves an open door without any actual hints of what it will do, have a several hour kneejerk lifetime. If and when Germany comes out and denies everything Draghi said, whatever it may have actually been, it will be minutes.