- We don't see inflation expectations deanchoring
- Sees no specific spread target for ECB crisis tool
- New tool needed so monetary policy can work
Some ECB members had floated a spread of 150 bps as normal between German and Italy yields. Currently, Italian 10s are at 3.56% while German bunds are at 1.46%.
The risk for a new ECB program is that it goes offside with monetary financing laws. I also worry that they end up bringing a knife to a gunfight.
