As various countries cut rates, how will the ECB Council move? "March 12 Focus Points and Event Schedule"

Yesterday, the Dow Jones Industrial Average fell by more than 1,000 dollars again, and the market has been fluctuating by more than 1,000 dollars almost every day.

In a world where volatility is rising, Tedros Adhanom Ghebreyesus, the WHO Director-General, has finally declared a pandemic.

Market volatility is rising even further.

In response to this situation, following the United States, the United Kingdom also announced an emergency rate cut and support measures, and ECB President Christine Lagarde and German Chancellor Angela Merkel have stated that EU countries need to cooperate to respond.

President Trump is expected to give a speech at 10:00 Japan time after this.

◎ Today’s Highlights

1) Bear market and economic measures

Global stock prices have continued to fall, entering a bear market.

Yesterday, Tedros Adhanom Ghebreyesus declared a pandemic; Italy announced the closure of all stores except pharmacies and supermarkets; Austria closed its border with Italy; the UK downgraded its GDP forecast, among other negative factors.

In response, the UK announced emergency rate cuts and support measures totaling 30 billion pounds; the US is considering delaying tax payments, and it is believed that President Trump will announce some measures at 10:00 Japan time later.

After the rate cut, the pound was sold off, but the rate-cut effect and the support measures limited the stock price decline and reduced the extent of pound selling.

In the US, there were statements about delaying tax payments, but with the focus on President Trump’s policy proposals, the delay led to disappointing stock declines as the announcements were delayed.

Thus, negative factors, economic measures, and expectations have been driving the markets in a seesaw pattern.

Which way it will tilt today, and what factors will emerge, we should first watch President Trump’s speech at 10:00 Japan time.

2) ECB Council

After the Bank of England’s emergency rate cut yesterday, expectations are that the ECB council may cut rates by 0.1% today.

However, the ECB already has a negative interest rate of -0.5%, and there is skepticism about how effective a further 0.1% negative rate cut would be.

Therefore, expectations are focused on measures beyond a deeper negative rate cut.

If QE is increased, attention will be on changes to EU rules such as expanding the purchase programs for government and corporate bonds.

There is also attention on whether there will be a relaxation of TLTRO conditions or other easing measures.

If substantial easing is introduced, there may be euro selling, and attention is on how far the euro will be sold.

◎ Today’s Event Schedule

Thursday, March 12

10:00　USDPresident Trump’s Speech

17:30　SEK Sweden CPI (Consumer Price Index)

21:45　EURECB Council/Policy Rate/Statement Announcement

22:30　EURLagarde, ECB President, Press Conference

Friday, March 13

02:00　USD U.S. 30-year Bond Auction

06:00　NZD Westpac Consumer Confidence Index

06:30　NZD NZ Manufacturing PMI

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