Yesterday, the #ECB announced a new set of measures to calm markets regarding periphery bond yield spikes. The measures, basically consist on using the proceeds from core European matured bonds (and coupons?) to buy Italian, Greek and Spanish bonds and avoid further spread widening between core and periphery. Several observations: (1) What happens to QT? Is the ECB balance sheet ever going to shrink? (2) if this exercise continues for years, the quality of the balance sheet is going to deteriorate substantially. (3) What’s the plan for periphery countries to reduce debt? (4) how is this different from what Japan is doing (#yieldcurve control) with its treasury curve? And why should we expect anything different (ie euro weakness)?
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https://www.reuters.com/markets/europe/exclusive-ecb-channel-cash-north-south-bid-cap-spreads-sources-2022-06-30/
