The market is all revved up for JCT to signal he will buy billions more of the outstanding debt of peripheral Euro zone sovereign debt. In addition, it also expects him to drop his insistence that “non-standard” liquidity measures by wound up over the next several months.
I’m not 100% sure Trichet will tip his hand on plans for further bond buying as it is a contentious issue, especially between the ECB and Bundesbank.
I’m quite confident that Trichet will back away from removing non-standard measures anytime soon. Expect him to say the ECB will remove non-standard policy when conditions allow. Clearly that is no time soon…
Trichet has been set up by European officials for failure: Both the EU’s Rehn and Barroso have essentially turned to Trichet to solve the problem that politicians so far have been unable to contain.
Look for EUR weakness and a revival of risk aversion if Trichet fails to deliver.
