Daniele Antonucci, Jaoa Almeida and........>

ECB VIEW: Daniele Antonucci, Jaoa Almeida and Elaine Lin at Morgan Stanley are

expecting the ECB to deliver a "balanced message" at this Thursday's ECB

meeting. They only expect the next change in forward guidance to occur in March,

once inflation has started to rise according to their projections.

- While Morgan Stanley say that the ECB is unlikely to have yet decided how to

change the language of forward guidance they see two possibilities: "The first

one is to make the QE easing bias more symmetric, by saying that the ECB stands

ready to increase the horizon of the asset purchases if needed, but dropping any

reference to a potential increase of their monthly size once again. A second

way, perhaps after this step, is to make the programme closed-ended, by no

longer saying that it could buy beyond September."

- In terms of rates markets, Morgan Stanley think that the ECB's renormalisation

process will cheapen the belly of the German yield curve. However, the

renormalisation process will be slow and positions should be "structured to

withstand any setback". They recommend Bund 5-10Y steepeners given its flat

carry profile.