While Asian stocks continued their longest rally since August overnight, led higher for the third consecutive day on the back of Japan (+1.3%), Australia (+1.2%) and China (+0.4%) strength, European stocks have as of this moment halted their longest rally since October (Stoxx -0.1%) and U.S. index futures are little changed.
In the aftermath of this weekend's disappointing G-20 summit in Shanghai in which the much anticipated "grand Chinese devaluation" was not only not discussed, but any abrupt devaluation was taken off the table (if only for the time being), the market has shifted its attention to the next big policy event, which is the March 10 ECB announcement where much more easing is already priced in.
Mario Draghi better put up or shut up at the next ECB meeting as the market is more-than-pricing-in a very significant deposit rate cut (deeper into NIRP). In fact, at -56bps, 2Y German bond yields are the most "priced in" since 2011 (and bear in mind he disappointed in December).
And in close up - Draghi "disappointed" in December
Though ironically that surge in yields in December enabled more Bunds to be eligible (albeit briefly) for Draghi's mass purchase scheme.
Exactly one week ago, when BofA's Michael Hartnett explained what global capital markets need to rebound from their recent doldrums, he laid out what he sees are the world's two biggest problems:
Today's current inflation data dump from across the European nations appears to confirm forward inflation expectations trend (plumbing new record lows). With a considerably bigger than expected decline in prices , pushing Germany, Spain, and France back into deflation, pressure is mounting on Mr.Draghi. As one EU economist exclaimed, "the data send a clear message to the ECB and the only question that remains now is how bold action would be."
Germany tumbles back into deflation...