POWER: Poland’s April Drops to All-Time Low, Works Extended at 910MW Coal Plant

ECB Executive Board members de Guindos, Lane and Cipollone each played down the role of the neutral rate in calibrating near-term policy last week. This was a seemingly concerted effort to temper expectations ahead of the widely anticipated staff report on r*, which was released on Friday.

• As expected, the report contextualised the recently cited neutral rate range provided by President Lagarde. Staff said "estimates of the nominal r* from the most recent interval range between 1.75% and 2.25%". However, given the large estimation uncertainties, "such ranges should be viewed as merely indicative and alternative methodological ranges were offered” (see here and here for more analysis).
• Given Executive Board comments and the heavily caveated nature of the report, it had little impact on market pricing. ECB-dated OIS price 88bps of cuts through year-end, largely unchanged from a week ago.
• The MNI Policy Team’s latest source piece looked at possible wording tweaks to the ECB’s policy statement at the March decision. While the bank is likely to adjust its reference to policy restrictiveness in the statement, there would be resistance on the Governing Council to completely removing it, as estimates of the neutral rate have edged downwards but remain uncertain.
• The week ahead sees Executive Board appearances from Lagarde (Feb 10, 1615GMT/1715CET), Schnabel (Feb 11), Elderson (Feb 12 at an MNI event – registration link here) and Cipollone (Feb 13).
• Bundesbank President Nagel will speak on the neutral rate of interest on Wednesday, while Bank of Italy Governor Panetta will speak for the first time since November over the weekend.
• In the following publication, we provide a summary of ECB-speak between February 4 and February 10: 250210 - Weekly ECB Speak Wrap.pdf

US Cash opening calls, will be set to be positive, but still short of Friday's best levels.

• Calls: SPX: 6,063.6 (+0.6%); DJIA: 44,590 (+0.6%/+286pts); NDX: 21,680.2 (+0.9%).

• RES 4: 6178.75 High Dec 6 and key resistance    
• RES 3: 6162.25 High Jan 24 
• RES 2: 6147.75 High Jan 31 
• RES 1: 6123.25 High Feb 7                  
• PRICE: 6081.25 @ 14:15 GMT Feb 10 
• SUP 1: 6014.00/5935.50 Intraday low / Low Feb 3           
• SUP 2: 5892.37 76.4% retracement of the Aug 5 - Dec 6 bull leg
• SUP 3: 5842.50 Low Jan 14 
• SUP 4: 5809.00 Low Jan 13 and a key resistance 

The initial sell-off on Feb 3 in the S&P E-Minis contract and the breach of support at 5948.00, Jan 27 low, continues to highlight a possible S/T reversal threat. If correct, it suggests that the latest bounce is a correction. A resumption of weakness would open 5892.37, a Fibonacci retracement point. On the upside, a stronger rally would expose key resistance at 6178.75, the Dec 6 ‘24 high. Clearance of this hurdle would resume the primary uptrend.