Commerzbank Weigh In On The TLTRO Situation

Commerzbank write “the looming TLTRO repayment will create headlines around mid-day when the ECB announces the next round of voluntary repayments. While these should slow down noticeably (we pencilled in €35bn), together with the €477bn mandatory redemption they will still likely push the total number above €500bn, which would be the largest balance sheet reduction ever in a single day. There are few signs of stress in banks' balance sheets or a credit crunch.”

• “While things don't need to stay this way, we concede that the market is more resilient than we thought given the multiple headwinds from policy and politics.”
• “The resilience is feeding on itself, which gives the ECB the opportunity to continue raising rates and the market thus trusts that it has the potential to ease more aggressively if something breaks, or the economy tips over.”