Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Reinvestments from the principal payments of the European Central Bank’s pandemic emergency purchase programme, PEPP, will be applied flexibly to counter resurgent euro area fragmentation risks, the Governing Council said in a statement following Wednesday’s ad-hoc meeting, with existing work on designing a new anti-fragmentation tool to be accelerated.
The statement clearly linked recent widening of spreads with “lasting vulnerabilities” left behind by the Covid-19 pandemic, a move that will help the ECB to address any legal concerns that may arise, while emphasising it’s proportionality (see: MNI INTERVIEW: ECB To Overcome Obstacles To New Crisis Tool). However no indication was given by the central bank as to whether bond buying will be front-loaded was given, or how existing tools aside from PEPP could be adapted.
Eurozone periphery bond yields gave up some of their gains seen earlier Wednesday, with the yield on the benchmark 10-year Italian yield last trading at 383 bps, down 33 bps on the day, but off the day's best levels at 375 bps. The BTP was last trading 220 bps over equivalent German bonds.
BTPs vs German Bunds
Source: Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.