The ECB is dovish

The European economy weakened substantially and the Euro-area growth forecast has been revised to 1.1 from 1.7.

The most relevant take away from today's update is the new series of financing loans to financial institutions. TLTROs will be provided until at least 2021 (Q1). This will take away some weight from the banking sector and the uncertainty due to the "maturities wall" approaching in the bond world. The reinvestment of the principals payments from purchased securities has also been reconfirmed and could continue beyond the a rate increase. Finally the key ECB rates have been kept unchanged until at least the end of 2019.

10yr BTP immediately reacted to ECB's dovish stance

The economy weakened sizeably since December 2018 but, locally, there are positive signs of recovery.

Forget about the comments of inflation.

Best regards

Simplify Management Team

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