Oh, the irony.
Days after sending the euro plunging and sparking a rally in EGBs by pairing the announcement of APP wind down with data-and-state-dependent forward guidance on rates, the ECB will hold its central banking forum in Sintra from Monday to Wednesday this week.
Why is that ironic? Well, because it was Mario Draghi who sparked a mini-rates tantrum last year with hawkish comments at the very same Sintra forum.
That spike you see in bund yields at Sintra 2017 represented the worst selloff for German bonds in almost two years. Here’s some context with the recent plunge in bund yields to 0.19% (intraday) that accompanied the Italian bond selloff:
Last year’s Sintra rhetoric amounted to putting the most hawkish spin possible on a still dovish monetary policy stance and now here we are a year later (nearly to the day), and Draghi has just put the most dovish spin possible on a decisively hawkish turn in monetary policy.
It’s an interesting juxtaposition and there will be no shortage of fanfare in terms of parsing what comes out of Sintra anno 2018 in