ECB records were published which caused discussions about further rate cuts and a new round of QE. Morgan Stanley analysts have been most vocal over QE anticipating that with the current inflation data the ECB is likely to use all the tools it has in reach.
“Our macro analyst Daniele Antonucci anticipates 45Bn€ per month, with a remote possibility that it will increase to 65Bn€ per month and will include ETFS and banking sector bonds. In this “bull case” he anticipates that European bonds could go to -0.6%. The PER for Eurozone MSCI would rise 5/10% and the spread on corporate bonds, especially banking bonds, would narrow. In addition, there would be a change of the guard in sectoral performance with the cyclical shares in the lead. This is what has happened with previous announcements of QE,” they commented.