Technicals are the biggest driver for European LevFin right now; president Lagarde and co. may have accelerated that.

According to Barclays FICC Research (for the week leading up to Thursday’s decision), European high yield saw the largest inflow on record since 2005. It was also the largest as a percentage of net assets since 2016.

But the backdrop for the ECB’s 25bps cut wasn’t pretty: euro area composite PMI in contractionary territory for the first time in seven months and euro area inflation beneath the ECB’s 2% target for the first time in over three years.

It’s worth remembering that as recently as mid-September, markets expected the ECB to hold rates at this meeting. It underlines the divergence we’re beginning to see between Europe and the “Goldilocks” US (faster normalisation of monetary policy expected by ECB as economic weakness seems to warrant it).

A narrative to watch until year-end is whether this puts a dampener on European issuance or merely causes issuers to hurry up over fears capital markets close.