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The ECB has published its new capital......>

EUROZONE
EUROZONE: The ECB has published its new capital key.
- Assuming the ECB reinvest in line with the new capital key, there would be
more buying of Bunds (and to a lesser extent France), and less buying of Italian
BTPs and Spanish Bonos.
- The capital key is based on an average of population and GDP so there
shouldn't be much market impact here.
- The key question going forward will be how the ECB phase in the changes,
whether there is an impact for the existing stock of bonds. At present it is
unclear if the ECB rebalance of the current stock; or reinvestment to bring the
stock in line with the capital key; or leave the current stock invested as is
but reinvest in line with the capital key going forward.
- There should be more clarity on this at the ECB's Dec 13 meeting.

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