ECB PREVIEW: Draghi Seen Hurting Bunds by Echoing Sintra Script
- Citigroup, Barclays see meeting as bearish for German bonds
- Upside risks for euro currency as JPMorgan raises forecast
European Central Banks Watch ECB for Policy Clues
Barclays Plc and Citigroup Inc. suggest this week’s European Central Bank meeting may be bearish for bonds in the short term, with the institution expected to gently prepare the ground for an announcement on tapering of asset purchases.
Analysts also see positive risks for the shared currency heading into Thursday’s decision, with President Mario Draghi likely to repeat the tone of his Sintra speech. JPMorgan Chase & Co. strategists have revised their forecast for the third quarter higher by 6 percent to $1.15 and those at Morgan Stanley recommending to buy any dip toward $1.12. Euro overnight money market rates are currently pricing in the first full 10 basis points of rate increase for September 2018, with an additional eight basis points priced by year-end.