In early February, in a post titled "A Wounded Deutsche Bank Lashes Out At Central Bankers: Stop Easing, You Are Crushing Us", we showed just how vast the feud between Europe's biggest - and ever more troubled commercial bank - and the ECB had become. As DB's Parag Thatte lamented then, "ECB rhetoric suggests additional easing measures forthcoming in March.
In an overnight session dominated by the latest political developments out of the US where Hillary Clinton officially claimed the democratic nomination, the financial newsflow focused on China's trade data, where exports fell 4.1% from a year earlier, in line with expectations, but imports dropped 0.4% from a year earlier, the smallest decline since they turned negative in November 2014, likely reflecting higher commodities prices but really driven by "imports" from Hong Kong which rose to $2.48b, the highest since at least 1999; and a 243% y/y surge in dollar term, also a historical high.
With rates left unchanged - deep in NIRP-land - amid an increasingly fragile banking system (see Italian bank stocks), we expect ECB chief Mario Draghi to reassure an anxious public how well QE is working (despite weak growth and tumbling PMIs), how great negative rates are for stimulating 'something' despite inflation's drift lower, and how his about-to-be-launched corporate bond buying bonanza will really solve the problems of the world (by enabling firms to lever up even more and buyback more stock?).
Started Early:
With the ECB announcement due in a few minutes, followed by Draghi's press conference, today's ECB meeting should be a relatively dull affair as they are currently in 'wait and see' mode with regards to previous policy actions. As RanSquawk notes, general consensus among analysts is that the ECB are to keep rates on hold this month and avoid added stimulus.
There are just two drivers setting the pace for today's risk mood: the OPEC meeting in Vienna which started a few hours ago, and the ECB's announcement as well as Mario Draghi's press statement due out just one hour from now. Both are expected to not reveal any major surprises, with OPEC almost certainly unable to implement a production freeze while the ECB is expected to remain on hold and provide some more details on its corporate bond buying program, although there is some modest risk of upside surprise in either case.