Latest BBG ECB Sources Piece Applies Light Pressure

Bund futures move to the lowest levels of the week and look through 134.00 on the back of the latest BBG sources piece, which suggested that “some hawkish European Central Bank officials are pondering options to speed up the reduction of the institution’s €5 trillion stash of bonds.”

• In terms of the details, BBG sources noted that “while some are open to considering sales of securities from the ECB’s portfolio to complement steps taken to date, others would prefer phasing out the reinvestments of bonds bought during the pandemic.”
• Finally, the piece stated that “no formal discussion has taken place in the Governing Council and no decision is imminent.”
• The combination of the disagreement surrounding the best path to take re: any such steps, plus the lack of impending high level (Governing Council) discussion on the matter, as well as the time of day, is probably limiting any reaction in markets.