DRAGHI PREPARES MARKETS FOR MONETARY EASING & FURTHER EURO DEBASEMENT

 

Draghi outlined during the ECB's annual conference in Sintra, Portugal that:

  • The current EU outlook "remains tilted to the downside,"
  • More stimulus will be needed if the outlook doesn’t improve.
  • More interest-rate cuts and more QE are part of the central bank's arsenal.
  • Risks from geopolitical factors, protectionism and vulnerabilities in emerging markets have not dissipated and are weighing on the Continent's manufacturing industry.
  • "The prolongation of risks has weighed on exports and in particular on manufacturing. In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required."
  • “The (European) Treaty requires that our actions are both necessary and proportionate to fulfill our mandate and achieve our objective, which implies that the limits we establish on our tools are specific to the contingencies we face. If the crisis has shown anything, it is that we will use all the flexibility within our mandate to fulfill our mandate - and we will do so again to answer any challenges to price stability in the future,”

We should watch for the EURUSD to weaken after the Fed has announced it is cutting the Fed Funds Rate.

In parallel, Germany's ZEW investor expectations index tumbled to -21.1, far below the estimate of -5.6, a sign that sentiment continues to deteriorate.

 

[SITE INDEX -- TIPPING POINTS - EU BANKING CRISIS]

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SOURCE:  06-18-19 -   - "Euro, Bund Yields Slide, Stocks Rebound As Draghi Clears Way For More Stimulus"

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