I don’t even feel like mocking this news story. Last week’s bond rally placed $2.2t worth of bonds out of the ECB’s sphere of fucktarded influence. As such, there are many who want to change the rules in order to permit the PSPP buy bonds deep into negative territory.
The surge this week in relatively safe sovereign securities left about a third of the Bloomberg Eurozone Sovereign Bond Index ineligible for purchase under the ECB’s quantitative-easing program. The gains mean $2.2 trillion of debt in the index now yields less than the institution’s deposit rate — currently minus 0.4 percent — and is therefore off-limits.
That’s increasing speculation the ECB will have to tweak its public-sector purchase program, through which it buys 80 billion euros ($90 billion) of securities each month. The program is due to run until at least March as policy makers try to boost growth and inflation.
“It puts more pressure on the ECB to tweak the PSPP because with yields falling like that, more bonds are falling below” the buying threshold, said Vincent Chaigneau, London-based global head of rates and foreign-exchange strategy at Societe Generale SA. “That’s definitely adding pressure to make an announcement.”
The “big question,” Chaigneau said, is whether the ECB will opt for “selective buying” of bonds yielding less than the deposit rate.
While Draghi and his colleagues already appointed a committee to improve the implementation of QE, a bond selloff after the ECB’s Sept. 8 policy decision eased pressure on the central bank by reducing the amount of bonds it couldn’t buy.
Anyone have an opinion on this? Their $90b monthly bond buying frenzy has caused yields to drop deeply into negative territory, effectively disqualifying them from ECB purchase. To combat this problem, they want to change the rules, you know, in order to stoke inflation.
How’s that working out for them thus far?
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