Although negative rates in Europe are not Deutsche Bank's baseline, DB now thinks that the odds of a depo cut are higher than what the market is currently pricing. DB outlines 3 main reasons behind this view: First, the ECB faces big institutional constraints to policy. QE runs against European treaties and political realities. The ECB is already moving to verbal guidance, but short rates are one of the few policy arsenals left. Second, liquidity in the Eurozone financial system is so unevenly distributed that subzero rates could have more positive effects than other countries. Third, a depo cut makes more sense now ... (full story)