Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Breaking News

Dow Closes at Record High as Cyclicals Rally Ahead of April Jobs Report

ECB fails to raise emergency bond buys, blames redemptions

EconomyMar 08, 2021 11:11AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: European Central Bank (ECB) headquarters building is seen in Frankfurt

FRANKFURT (Reuters) - The European Central Bank blamed large bond redemptions for failing to increase the pace of its emergency purchases last week, missing market expectations and adding to doubts about its commitment to supporting a pandemic-stricken, debt-laden economy.

Investors had been waiting for the weekly update to establish whether a divided ECB was prepared to step in and stem a selloff in government bond markets, largely spurred by talk of higher inflation in the United States.

The ECB bought 11.9 billion euros worth of bonds under its Pandemic Emergency Purchase Programme (PEPP) in the five days to March 5, slightly less than in the previous week, the data showed.

An ECB spokeswoman said the net purchases were affected by "seasonality factors", particularly large amounts of bonds reaching maturity. This "temporarily delayed" an increase in the ECB's bond pile, she said.

The ECB will publish redemption figures on Tuesday.

"A second consecutive week of very low net PEPP purchases ... despite dovish ECB rhetoric," said Frederik Ducrozet, an analyst at Pictet, on Twitter "And don't get us started with large redemptions and seasonal factors. Where there's a will there's a way."

He had expected purchases of 20 billion euros while UniCredit analysts had set the bar at 17 billion euros. The ECB has 971 billion euros worth of PEPP firepower left to spend by March 2022.

The small net purchases in PEPP, however, were offset by more buying under other ECB programmes, which took the weekly total to 17 billion euros, up by 24% on the week before.

DIVIDED ECB

ECB policymakers are divided on the merits of intervening to bring down bond yields before their policy meeting on Thursday.

The dovish camp, headed by Italian board member Fabio Panetta, has argued that the rise in yields is unwarranted and jeopardising the euro zone's recovery.

However, his German colleagues Isabel Schnabel and Bundesbank President Jens Weidmann have been more cautious, with the former going as far as saying that a rise in yields could be welcome if it reflected improved growth prospects.

Despite the rise, bond yields are still low in absolute terms or even negative.

Italy was paying 0.74% to borrow for 10 years on the market, or less than the expected rate of inflation. Germany, the bloc's safe haven, was still getting paid 0.29% via below-zero yields.

ECB weekly data includes trades completed by the market close on Wednesday, which then take two days to settle.

Around 24 billion euros in Italian multi-year bonds and a further 8 billion euros in French inflation-protected notes matured during the reporting period, according to UniCredit estimates.

ECB fails to raise emergency bond buys, blames redemptions
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Connecticut Yankee
A_Jaundiced_Eye Mar 08, 2021 12:57PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Famous remark about American Fed is apropos to the ECB also: Watch what they do, not what they say.
Roger Miller
Roger Miller Mar 08, 2021 11:49AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They know that the inflation caused by cheap money to the wealthy and governments causes higher prices. This hurts the poor and middle class the most, making us all the serfs of the political and wealthy elite.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email