Ahead of the ECB, Spain will look to sell €3-4bn in 2014, 2015, and 2017 issues, with chances of finding much lower yields for 2014 and 2017 bonds. Knowing that the ECB shows signs of raising the bar for rate cuts given the diminishing effectiveness of rates at the zero bound and growing problems of transmission, a rate cut is less likely: “As a result, we think that the ECB will keep rates on hold this week, but do still see further rate cuts eventually as the economy is still looking quite soft, and look for a 25bps cut to the refi rate in December”, Pontoh added, expecting an ECB's press conference focused on the OMT and repairing the transmission mechanism of monetary policy.
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