As warned first thing this morning, "There’s A Good Chance Draghi Sends The Euro Slumping", and sure enough Draghi did just that when during his press conference, the ECB head made a small but material adjustment to his introductory statement as follows:

"The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility"

As a reminder, in Draghi's last statement, the central banker said "the balance of risks is moving to the downside" confirming not only that the European economy is now on the verge of contraction, but that this chart, showing that the Eurozone is now effectively in a recession...

... has not been lost on the ECB.

In kneejerk response to this confirmation that the Eurozone economy is going from bad to worse, the EURUSD slumped to session lows, dropping as low as 1.1307 as previewed earlier, before rebounding modestly back to 1.1320...

... while Bunds extended gains, with March Bund futures rising 70 ticks to touch a new contract high at 165.27. As for stocks, with European bond curves pancaking once again, the banks slumped, dragging the broader market lower:

STOXX BANK INDEX PARES GAINS, TURNS NEGATIVE AS DRAGHI SPEAKS

STOXX 600 PARES GAINS, TURNS FLAT AS EURO-ZONE BANKS DROP

There was another reason banks are sliding: as Draghi announced during the presser, the ECB had addressed TLTROs - one of the big questions for today's press conference - but no decision had been made. This lack of clarity has put new pressure on Italian bonds, which are seen as one of the likely beneficiaries of a new round of operations, as a result the Italy-Germany spread has moved modestly wider.

On the bright side, BTP futures are holding on to gains on the day and 10Y Italian yields have continued a foray in the past week below the 200-DMA as domestic political risk appears to have simmered down for the moment.

So with risks "having moved" to the downside, and the ECB no longer doing QE, what is Draghi's recommendation?

DRAGHI URGES GOVERNMENTS TO RAISE LONGER-TERM GROWTH POTENTIAL

How would they do that? Why by boosting deficit spending and sending their debt surging. Which is great... if only Brussles didn't recently crucify Italy for trying to do just that.