Net Asset Purchase Reduction Picks Up Pace

ECB net asset purchases were negative E22.8bln in the week ending July 21, the biggest weekly reduction going back to March 2020, with the uncapped APP runoff that started this month beginning to have a more noticeable effect on the size of the balance sheet.

• The PSPP portfolio had its largest ever weekly contraction, falling E13.9bln, almost equal to the previous than the previous 6 weeks' reduction combined, on the back of E13.8bln of redemptions (as the ECB notes re the residual negative E0.1bln in weekly gross purchases, "As purchase volumes decline during the partial reinvestment phase of the asset purchase programme portfolio, this column may sometimes show negative amounts. These are expected to be infrequent and would result from sales of securities conducted, for instance, for risk management purposes." )
• PEPP holdings contracted by E4.1bln amid E7.5bln of redemptions.
• That brings the total drawdown in the PEPP + APP portfolio to E125bln, at E4.83bln vs the series peak of E4.96bln.
• APP net purchases concluded in July 2022, with passive runoff of E15bln/month from Mar-Jun 2023, and uncapped runoff from July onward.
• The latter is estimated to represent a pace of E25bln per month, with which the latest data is more consistent than seen in the first half of July.