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.
The ECB snapped a five-month hiatus to buy 22 billion euros ($31.7 billion) of government bonds in the week through Aug. 12, and has bought more securities since. That helped push 10-year Spanish and Italian yields below 5 percent after they surged to euro-era records the previous week amid concern contagion from the debt crisis had infected both countries.
Continue Reading for Free
Register and gain access to:
- Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
- Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.