MADRID | March 10, 2015 | By Luis Arroyo | Six years after the Federal Reserve and the Bank of England launched their QE programmes, the ECB proceeded on Monday. Will Mario Draghi at least have the same partial success as his peers? That is, being able to slowly revive the economy and restore hope that the situation is getting back on track. In the graph above, see how five EZ governments are already borrowing at super low rates.
The Corner | March 10, 2015 | Sovereign bonds will not have anything to offer soon, and corporate debt becoming the biggest beneficiary: IRR also will reduce significantly, although we won’t see negative nor zero levels, Bankinter analysts point out.
The Corner | March 9, 2015 | Peripheral bonds hit minimum lows on Monday as the ECB and the 19 national central banks started the much-awaited sovereign puchases on Monday. Short-term eurozone interest rates are expected to move deeper into negative territory as the QE unfolds. “This programme will mean a safety net for the eurozone equities and bond markets. However, we might see some corrections,” experts at Link Securities commented. Liquidity injected in the system “will first push bond prices up, but almost simultaneously will move towards equities,” Bankinter analysts noted.
MADRID | By JP Marín Arrese | The ECB unleashed a monetary onslaught yesterday aimed at breaking the stubborn deflationary pressures and sluggish growth have shown up to now. The massive artillery barrage mercilessly pounded enemy lines with tons of fresh money, leaving defenders no other option than unconditional surrender. With all ammunition and reserves engaged in this breathtaking D-Day, the ECB would find itself helpless should its gamble fail. As previous landings ended in disaster, the issue now is whether this assault will work as planned.
MADRID | By Ana Fuentes | Hours before ECB’s president Mario Draghi unveils its big easing program, we spoke to think tank Bruegel central banks’ expert Silvia Merler about an eventual national risk bearing. It could be a way to make QE more acceptable by Germany, she believes, although “it should be traded-off against a significant size” (meaning more than the €50bn purchases per month some market watchers are talking about).
MADRID | By J.P. Marín Arrese | Mario Draghi has snatched green light for launching his coveted bond-buying scheme. In exchange, he has caved in to German pressure transferring the potential losses to the national banks. The ECB may seem to have lost its independence but striking such a deal was worth the price.
MADRID | By Luis Arroyo | According to Wolfgang Münchau, Thursday will be a decisive day for the ECB. It will be decisive for the raised expectations, not because we are going to see a QE’s announcement without restrictions.
MADRID | The Corner | ECB staff members have presented models for buying as much as €500 billion ($593 billion) of investment-grade assets, mostly sovereign bonds, according to sources close to the Governing Council. This will amount to an incomplete, partial solution according to some analysts. “It looks like a lot of money, although it won’t be enough” to expand the lender’s balance sheet by €1Tr as is planned, said Alberto Vigil of Barclays on Monday.
MADRID | January 5, 2015 | By Ana Fuentes | Dissensions at the ECB’s the Governing Council are well-known, and still have a long way to go. While some counselors require a truly expansive monetary policy which helps curbing the deflationary expectations, others deny these latter and therefore refuse to go further and define balance sheet expansion targets. Lorenzo Bini Smaghi, who was Member of the Executive Board of the European Central Bank from June 2005 to November 2011, is among those who believe that the ECB can take much stronger action.
MADRID | The Corner | As expected, the impact of the ECB’s second TLTRO, aimed at spurring credit to SMEs, was smaller than expected. Eurozone banks asked for €129.8 billion ($161.29 billion) in four-year loans, more than the nearly €83 billion provided in the previous offer in mid-September, but below the €150 billion expected by market watchers. Some believe this will increase pressure on Frankfurt to launch broadened QE on 22 January, the scheduled date for the next ECB meeting.