Futures Flat With All Eyes On ECB’s Mario Draghi, Who Will Promise Much And “Probably Do Nothing”

With last night’s latest Japanese flash crash firmly forgotten until the next time the trapdoor trade springs open and swallows a whole lot of momentum chasing Virtu vacuum tubes, it is time to look from east to west, Frankfurt to be precise, where in 45 minutes the ECB may or may not say something of importance. As Deutsche Bank comments, “Today is the most important day since…. well the last important day as the ECB hosts its widely anticipated monthly meeting.” Whilst not many expect concrete action, the success will be judged on how much Draghi hints at much more future action whilst actually probably doing nothing.
Between June and September the ECB seemed like it was catching up with the curve that many feel it is behind. However last month’s press conference saw many disappointed at Draghi with the feeling he was back-tracking on prior dovishness. Indeed many feel his performance last month contributed to the large falls in markets over the following week so the stakes are fairly high.
As a reminder, Reuters previously reported that “At least seven and possibly as many as 10 of the 24 council members are against U. S.-style quantitative easing.” The article pointed to deep disharmony and there are bound to be questions about it today in the Q&A.
As a result, European equities started the session off on a cautious note, as participants sit on the side-lines ahead of the widely anticipated ECB meeting, with a mixed batch of German earnings failing to provide the DAX with any further direction. This morning saw a host of earnings reports which have dictated the state of play in stock-specific moves, with UK supermarket Morrisons ( 8.6%) helping to boost the UK retail sector and German sports maker Adidas ( 4.5%) helping provide the DAX with some support as they look to target their troubled Russian and golf units. Elsewhere, fixed income markets remain relatively unmoved despite the modest softness in stocks, with volumes particularly thin ahead of ECB Draghi’s press conference. Nonetheless, Spanish paper was provided some reprieve following a strong triple-tranche auction with all b/c higher than previous and average yields lower than previous. However, the French Tresor failed to endure the same fate as their offering was poorly received by the market and sent their benchmark 10yr lower by 45 ticks.

This post was published at Zero Hedge on 11/06/2014.