Markets “Draghed” Back To Reality

Highlights of Thursday’s ECB press conference, mostly paraphrased from’s glories market currents section


Markets “Draghed” Back To Reality


We warned markets were likely to be disappointed by the ECB’s press conference Thursday given its limited powers and German opposition to expanding them and to an ESM banking license. Here are some highlights from the ECB meeting.


Draghi: says his comments last week made “no reference” to a bond purchase program. He understands the consequences as “everybody read what they want” into the London speech, but reiterates any action must stay within the ECB mandate


Draghi: Rejects idea ESM (the permanent rescue fund) can get a banking license, saying the current legal structure does not allow it to become an eligible banking partner to the ECB. At this point, essentially all that was drawn from his comments last week has been shot down. European shares and the euro have staged a 2-3% reversal since the press conference started.


Draghi: European shares and the euro fall as the ECB chief is talking a tough game, announcing no new plan this implies he doesn’t have the support (Germans) to undertake anything concrete yet. The euro – previously on a tear – falls back, chops around as no rate cut is bullish for EUR, somewhat balances the negative news of ECB inaction.