September 2012 Mario Draghi, ECB Bond Buying Program Details Leaked:
Mario Draghi, the head of the European Central Bank will be buying bonds. The new bond buying scheme will focus on “unlimited purchases of government debt” which will be “sterilized” to mitigate the negative impact of printing money. There will be no public caps on yields, the bond buying program may be called “Monetary Outright Transactions,” and will focus on short dated maturities of three years or less.
There is still skepticism about the effects of the new bond-buying program. For months there has been speculation the ECB would make a broad move like this and finally these forecasts have been supported with some news about the plan. The euro rose today slightly and bond yields from Spain and Italy are nowhere near the 7 percent highs from earlier this year. Mario Draghi needs to be convincing and market participants are waiting anxiously to see if his plan will be similar to the leaked details. Investors are waiting for Draghi to make good on his promise a few weeks ago to do “whatever it takes” to keep the EU together.
Jobless claims could have an impact on the market tomorrow if they significant to the upside or downside as traders wait for non-farm payrolls on Friday. We don’t believe any number on Friday will be a good number worth bragging about and could bring back speculation of QE3. We are still bullish on equities short term unless Draghi disappoints however this could be negated by other central banks easing. We are watching bonds and the euro carefully as well as the financials.