ECB Watch: time to take out that insurance rate cut

Please find my latest ECB watch piece in the attachment.

• In a nutshell, I expect that the ECB will take out an insurance rate cut at the September meeting. In this regard, you probably have noticed that ECB-speak about further rate cuts is heating up.
• There is no 'smoking gun' that justifies a cut outright I must emphasize. Hence, a September cut is not fully priced in.
• Even after another cut the ECB's preference for an inverted forward curve will remain, given the sclerotic conditions the Eurozone economy finds itself in. Add to that trade tensions.
• Thus, if I am right, the short end should rally a bit from here.