It is not about the data today though there has been a slew of data that in other times would have moved the market.  The flash HSBC China PMI was reported above expectations at 49.8 from 49.6 in December, but still shows manufacturing sector of the world’s second largest economy is still slowing. Eurozone’s flash PMI was also a bit better than expected, consistent with 0.2%-0.3% quarterly GDP. Â
The UK reported considerably better than expected retail sales, but sterling remains offered. December retail sales were expected to have fallen 0.6.% instead they rose by 0.4%. Excluding autos, retail sales rose 0.2%. They were expected to have fallen by 0.7%.  Â
The ECB’s announcement helped spur a new round of dollar-buying against most of the majors, save the yen.  After a quiet Asian session, Europe has extended the euro’s drop to $1.1220, which corresponds to the 61.*% retracement of the entire rally from record lows to record highs. We had thought that much of what the ECB would announce had already been largely discounted. The evidence was the rally in European stocks and bonds, and the persistent decline in the euro. There was not only no bout of profit-taking, but existing trends accelerated.  Â
The asset purchases are not really much larger than expected. The 60 bln euro a month includes the covered bonds and asset-backed securities, which are already being purchased at a rate of about 10 bln euros a month. It appears 5 bln euros EU institutional bonds will be bought  a month. This leaves about 45 bln a month of sovereign bonds.
There is some pooling of risk but only for the buying of European institutions’ bonds, like the EU and EIB. Total amount to be bought in the eighteen months from March through September 2016 will be roughly 10% of eurozone GDP. This is in line with the first round of asset purchases by the Federal Reserve and Bank of England. In the period of time it takes for the ECB to buy a tenth of its GDP, the BOJ will be buying a quarter of Japan’s GDP (worth of assets).Â
