Eu­ro­zone yields.

Kathimerini English - - Focus -

Italy’s 10-year bond yield touched a six-week low yes­ter­day, clos­ing the gap over toprated Ger­man peers to its tight­est this year fol­low­ing signs of out­sized buy­ing of Ital­ian debt by the Euro­pean Cen­tral Bank. Data re­leased late on Mon­day showed the Frank­furt-head­quar­tered ECB bought far more Ital­ian bonds than it was sup­posed to in July for its mon­e­tary stim­u­lus scheme, mak­ing up for a dwin­dling sup­ply of el­i­gi­ble debt else­where in the sin­gle-cur­rency bloc. The ECB and Bank of Italy to­gether bought 9.6 bil­lion eu­ros of Ital­ian debt, nearly 1.5 bil­lion more than the com­po­si­tion of the 60-bil­lion eu­ros monthly pur­chase would dic­tate. This was the big­gest de­vi­a­tion from Italy’s quota rel­a­tive to the size of the over­all monthly amount. French and Span­ish bond pur­chases by the ECB were also over­sized in July com­pared to their shares of the Euro­pean Cen­tral Bank’s cap­i­tal, the yard­stick used to de­ter­mine how many bonds must be bought. This may help ex­plain why pe­riph­eral bond mar­kets held up rel­a­tively well dur­ing a sell-off that fol­lowed com­ments by Mario Draghi at the ECB Fo­rum on Cen­tral Bank­ing in Sin­tra, Por­tu­gal in late June. The ECB pres­i­dent’s re­marks at the event were widely viewed as pre­sag­ing a shift in the Euro­pean Cen­tral Bank’s ul­tra-loose mon­e­tary pol­icy stance in com­ing months. Ital­ian bonds have re­cov­ered most of the losses made in the wake of Draghi’s Sin­tra speech, with yields roughly 10 ba­sis points above where they traded the day be­fore the com­ments. In con­trast, Ger­man Bund yields are about 21 ba­sis points higher. Across the eu­ro­zone, bond yields were up slightly yes­ter­day.

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