Euro Crisis Watch: ECB could resume bond buying this week
Monday, April 16, 2012 - 04:10
April 16 - SThe pressure on Spanish bonds could prompt the ECB to revive its bond buying programme as early as this week, and in a big way, says Commerzbank's Christoph Rieger.
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The European central bank's bond buying program remained in hibernation last week. But with the pressure on -- his government bonds increasing by the day the ECB may be forced to resume -- -- is sooner rather than wakes up. For more I'm joined by Texas gulf -- up fixed income analyst at Commerzbank and find thought. Christophe on the ECB and active yet again but -- is that it's on to the bottom of the ball market and let's go. Well certainly the bond market is hoping that they will step in at some point but we have not reached that level yet. And as you know with the UCB's I'm looking into any pre defined spread or. Use targets are rather looking at a range of factors. And right now. The are probably not at a stage where they think they are really the ones who need to. Address the crisis at the moment and so -- more pointing the fingers towards fiscal policy. Whoever shoots the upside dynamics and spreads and yields continued as they have been. Over the past week then on I'm pretty sure that the ECB will be forced to act before the week is out. Before the because I so I'm -- relatively soon that. Yes. I mean we've seen. Quite a significant spread widening over the possibly can we have Spanish auctions. On Thursday and interest and we actually Spain this. -- the most -- pressure. Whereas the Spanish government -- through the one that has. Bin. Toughest it's a over the last couple of weeks in terms of what they've policy and regarding the austerity measures received telling government for instance. Did not seem as ambitious with regards as labor market reform. So there for the ECB could feel forced to send a signal that actually the market is overreacting on Spain. SEC BS and when ECB does come back to market what sort of size do you think you'll have to do because it seems like the laws of diminishing the times upsets again. Thereby suggesting that there will have to come in and in some sites have an impact. Yes definitely. Intervening in Spain or Italy is not the same as intervening in NC Portugal or Ireland. And therefore. The sizes would have to be large. Whether the same time to be knows very well. Was suddenly talking more than a couple of billions. Oh during the course of the week. Clearly I think double digit billion figures. Would be necessary but if you look at the track record of the ECB and how much they spend and what they've achieved with that. It is. Quite a big -- -- is to say the least. That they if not really succeeded in bringing in spreads so it needs to be a concerted. Effort if you like on behalf of the ECB one and but also. From the fiscal authorities all the politicians. I don't deal aside. Okay just to finish up you mentioned this Spanish bond auctions on Thursday. Madrid going to sell up sued two and a half billion euros. How do you think those options will -- in light of where we are. Some more price concessions may be required going into the auction especially in -- part of curve. I'm so we may be heading into the auction with yields just above the sixth sense and will. All of torn off -- is rather small size normally they would go forth you know half. And also give that patient at the same time at the fund and which is not this price sensitive. They could ask you who they're supply towards this maturity for the good enough to -- So once these auctions honorable -- talk to us to look good that we could get a bit of relief comes here. Okay just -- thank you very much my finds that the comments by. That -- crystal Frieda there's more on the eurozone. On the inside a plus homes sold to Logan I'm -- we gave him this is sort of.
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