Divyang's focus is in following broad macro trends globally with a view to building a tradable analytical framework. He was editor of the flagship products at IDEAglobal as well as head of FX research and then moved to Chief Strategist at Commonwealth Bank of Australia before joining IFR.
The inconsistency between the ECB’s rate forward guidance (unchanged rates at least through first half of 2020) and market pricing remains. While market pricing has reduced the odds of a 10bp cut by March 2020 to 70% from 100% prior to yesterday’s meeting, a rate cut is still priced in during H1 2020.
We expect the ECB today to deliver what is likely to be a mini-easing package as downside risks to growth/inflation remain in play. At least as important as the easing will be the overall message that is likely to consist of 1) optimism over the outlook such that growth and inflation are expected to improve; and 2) the ECB is willing to use all policy tools should risks crystallise.
BTPs are continuing their rally as Italian Finance Minister Giovanni Tria is reported to be wanting to keep the deficit below 1.6% for 2019.