ECB Rate Decision; Draghi Leaves Key Interest Rate Unchanged at 0.75%

The much-awaited ECB rate decision results in a yawn. The ECB remarks are 'unchanged' for line item after line item.  The key interest rate remains unchanged at 0.75%.  Where is the pony? The ECB decision took on great importance after Draghi's comments about supporting the euro at all costs last week caused a massive upside global equity rally. The pre-decision rhetoric reached fever pitch a short time ago with traders expecting anything from lower rates to a long term LTRO, or even the ECB stepping up a bond-buying program addressing Spain and Italy woes. Instead, traders receive nothing, butkis (at least so far--watch the press conference). Markets do not respond dramatically, perhaps traders are willing to wait for the Draghi comments to firmly assess exactly what the ECB's plan, or road map, is moving forward. Look's like Draghi is keeping Germany happy.

The futures before the announcement at 7:40 AM EST show the Dow up 49, the S&P's up 5.70 (+0.4%) and the Nasdaq up 10.75 (+0.4%). The broad markets (S&P) and tech (Nasdaq) are up an equal amount so tech has not yet decided which side to favor today. The 10-year yield is 1.524%.

After the announcement, at 7:50 AM, the futures show the Dow up 35, the S&P's up 3.70 and the Nasdaq up 6.25. The 10-year yield remains at 1.52%. The U.S. Dollar is 82.82 above its critical 50-day moving average at 82.64. The market reaction is muted, a deer in the headlights reaction. Draghi's press conference is coming up at 8:30 AM EST which will provide further details and where Draghi may announce any easing measures to back up his talk last week. Perhaps the futures markets will react at that time. Draghi better walk out with that pony he promised.

Note Added 8/2/12 at 8:40 AM:  Draghi is busy promising everything but delivering nothing. He needs a top hat and cane for all the tap-dancing he is performing.  He promises operations of adequate size are coming.  He says seniority concerns will be considered. Draghi promises he will design appropriate modalities.  Words, words, words.  Like Wimpy of Popeye fame, "Please provide me a hamburger today and I will gladly repay you next Tuesday."  Markets now move lower on Draghi's empty promises.  The euro was at 1.24 now 1.23.  The Dow is -53, S&P's -7.2 and the Nasdaq -13.25. There is no pony, Draghi displays a jack*ss instead, wearing a suit. The market mood turns sour. The 10-year yield is at 1.50% dropping two bips from an hour ago.  The Nasdaq is down -0.43% now with the S&P's down 0.39%, hence, tech is leading the broad markets lower, which is bear friendly. Stay tuned since lots of volatility is ahead this morning. Draghi needs to provide details. It is okay to say all those things but he needs to attach time frames and a schedule so the markets, and traders, can hold on to something moving forward. Draghi, in essence, is saying "Trust me," today, and the futures markets are not. The Italy 10-year yield is 5.8% remaining under 6% and the Spain 10-year yield is 6.6% remaining under 7%, so the European bond markets are calm in response to Draghi trusting his words.  The U.S. equity markets are not.