###POV. It's clear that the EGB market..........>

ECB: ###POV. It's clear that the EGB market listened to the ECB speakers like

Smets/Praet and newswire articles to conclude that the ECB looks upon the

additional time period for the asset purchase programme is more important for

monetary policy than the size of the programme.

- Taking on board the Reuters article saying that the extension period is likely

to be 9 months, the German yield curve bull flattened between 2 and 10Y

maturities, led by an 8bp decline in the Bund Feb-27.

- The problem that often confuses with QE events is the counter-intuitive market

response. More QE should reduce yields, right? But the impact is often very

short-term and yields rise in the month or so after the announcement. This is

because recovery hopes rise, alongside forward rate hike expectations and this

impact overwhelms the influence of additional buying upon the term risk premium.

- Next Thursday's signalling effect is dulled because if the 9 month QE period

is the signal, no rate hikes are priced (or anything close) for all of 2018.

- The monthly size of the programme IS IMPORTANT, in countries where a bond

shortage is obvious, like Germany, but term premia are already very low.