ECB Stares Down Bond Yields

Central bank must back up debt purchases to stave off speculators.

The European Central Bank needs to back up last week’s record purchases of government debt with further buying to prevent speculators from driving borrowing costs for Spain and Italy back up again.

“The ECB’s bond purchase program has been a very effective deterrent to panic selling, and as long as they don’t blink now, they can have this problem of speculative shorting licked in weeks rather than months,” said Luca Jellinek, the London-based head of European rate strategy at Credit Agricole Corporate & Investment Bank.

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