Who moves markets more, Lagarde or the German Constitutional Court?

Here is the Germany 10 Years vs Italy 10 Years Spread on the day of ECB president Lagarde’s unfortunate slip-up on March 12 that the ECB was “not here to close spreads”.

That’s a change of a good – 60 bps. Let’s see how the Karlsruhe Court Judges in their magificent scarlet robes, created in 1951 by a theatrical costumier to update their look, fare. That of course means to concentrate on that equally unfortunate day on May 5 when they delivered their hair-raising decision on the ECB’s PSPP.

So the GCC moved the spread by – 15 bps. Clearly, Lagarde was the biggest market mover, but it must be noted that the drop of the It/G bonds spread on May 5 occurred from a level and stable basis over a couple of days. Be that as it may, one should be cautious, “Ultra vires. Ultima ratio. Beware of Germans using Latin“.