ECB's Muller: There is no strong case to resume bond buying

More hawkish ECB talk

I'm beginning to think that nothing is coming on Sept 12.

• Rate cut should be first option if action needed
• Going into next week's meeting with an open mind
• Market expectations on stimulus have gone too far
• More QE disproportionate without deflation risk
• Tiering reduces stimulative effect of rate cut

So we may get a 10 bps cut and nothing else. Several ECB policymakers, including Muller last week, who have had comments along these same lines.

What's tricky is determining how the market will react to a lack of action. Normally a hawkish surprise is positive but there's a decent risk the market concludes that the ECB is no longer helpful to the economy and sells the euro on expectations of slower growth.