Draghi Sees Substantial Downside Risks

UPDATE: EURUSD at highs of day now 1.2790, sovereigns and corps/fins tightening back modestly

The ECB press conference [8] has begun and immediately the headlines are flying and driving EUR weaker (ironically not helped by the dismal US macro data that just printed). European sovereign spreads are leaking wider, stocks are underperforming, treasuries outperforming bunds, and corporate and financial spreads are widening rapidly on his comments, via Bloomberg:

*DRAGHI SAYS ECONOMIC OUTLOOK FACING SUBSTANTIAL DOWNSIDE RISKS
*DRAGHI SAYS FISCAL COMPACT MUST HAVE UNAMBIGUOUS WORDING
*DRAGHI SAYS FISCAL CONSOLIDATIONS ARE UNAVOIDABLE
*DRAGHI SAYS ECB WILL ACT AS AGENT FOR EFSF
*DRAGHI SAYS HARD DATA DON'T YET SHOW STABILIZATION
*DRAGHI SAYS HILDEBRAND WAS `VERY, VERY GOOD' GOVERNOR
*DRAGHI SAYS ECB DIDN'T DISCUSS CUTTING DEPOSIT, MARGINAL RATES
*DRAGHI SAYS ONGOING TENSIONS KEEP DAMPING ECONOMIC ACTIVITY
*DRAGHI SAYS ECB `VERY CONCERNED' ON HUNGARY
*DRAGHI SAYS ANY WAY TO INCREASE THE 'FIREWALL' FIREPOWER WELCOME
*DRAGHI: NATIONS SHOULD HAVE HAD CAPITAL READY ON STRESS TESTS
*DRAGHI SAYS NEW COLLATERAL RULES EXPANDED POTENTIAL RISK
*DRAGHI SAYS PSI WAS RESPONSE TO `SELFISH' BEHAVIOR
*DRAGHI SAYS ECB EXPECTS SUBSTANTIAL DEMAND FOR SECOND LTRO
*DRAGHI SAYS GREEK CASE IS `UNIQUE'

And some of the less critical though still interesting headlines...

*DRAGHI SAYS FINANCIAL MARKET TENSIONS HURTING GROWTH
*DRAGHI SAYS INFLATION MAY STAY ABOVE 2% FOR SEVERAL MONTHS
*DRAGHI SAYS GOVERNMENTS MUST CORRECT EXCESSIVE DEFICITS
*DRAGHI SAYS CASH DOESN'T `SIMPLY STAY IN THE DEPOSIT' FACILITY
*DRAGHI SAYS BANKS THAT BORROWED FROM ECB AREN'T REDEPOSITING
*DRAGHI SAYS FISCAL COMPACT SHOULD BE SIGNED AT END OF JANUARY
*DRAGHI SAYS ECB NOT PART OF GREEK TALKS
*DRAGHI SAYS `WE ALL REGRET' DEVELOPMENTS ON HILDEBRAND QUITTING
*DRAGHI: COMFORTING TO SEE SOME OPENING IN UNSECURED BOND MARKTS
*DRAGHI SAYS FIREWALL MUST BE OPERATIONAL, FULLY EQUIPPED
*DRAGHI SAYS EURO-REGION UNEMPLOYMENT CREEPING TOWARD 10%