📝ECB Verbal Intervention More Likely Than Triggering TPI: Rabobank

The TPI is one of the instruments that the ECB would rather not use,

and we believe that the odds that the instrument will be activated are low. However, simply by reminding markets of the instruments’ existence, policymakers could probably prevent a lot of the contagion risk to other countries.

Crucially, if the ECB were to use the TPI, we argue that this will be primarily to shield other countries’ debt markets from unwarranted fallout of the French political impasse. Policymakers can argue that the governments in those countries have been following the rules and did nothing to warrant significantly wider spreads. - Rabobank