The fact of the matter is that the continued presence of low nominal sovereign yields is the crux of the recovery, and any optimism the ECB brings forward will come with the ever-important commitment to seeing the €60 billion/month QE program to its conclusion in September 2016. Any commentary that suggests the QE program could be tapered – be it borne out of supply concerns or growth optimism – could cause a sharp Euro rally (shorts remain prevalent at 215.3K net-short contracts among speculators), a drop in equity markets, and yields to rise, especially in the periphery, which would surely send inflation expectations plummeting, thereyby undermining any progress seen to date.
It's in the ECB's best interests to downplay the scope of the recovery, and therefore, any rally see around the ECB meeting should prove short-lived.
It's in the ECB's best interests to downplay the scope of the recovery, and therefore, any rally see around the ECB meeting should prove short-lived.