Pooja Kumra, senior European rates strategist at TD Securities, points out that the ECB delivered on all policy fronts; however, the "adequacy" of the package, as well as the introduction of a tiered deposit system, left the markets puzzled.

“As seen from the experience of the SNB and the BOJ, the implementation of tiering does come with its initial teething period. However, we prefer looking at the bigger picture for EUR rates which will be marked by a "QE infinity" programme and a more persistent negative policy rate. From a rates perspective, this should be supportive for tighter EGB/credit spreads. However, a further push lower in Bund yields will be driven by markets repricing rate cuts from the ECB. This seems less likely in the near-term as the ECB implements its new QE programme only in November.”