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E C B Facing Bond Purchase Dilemma Due To Spreads

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Trichet Under Pressure Over Bond Purchases as Spreads Widen

By Gabi Thesing

June 10 (Bloomberg) -- European Central Bank President Jean-Claude Trichet is under pressure to explain how far he’s prepared to wade into government bond markets as the ECB’s purchases split policy makers and borrowing costs in some countries continue to climb.

Since the ECB announced its bond program on May 10 to restore “normal functioning” on markets, the extra yield that investors demand to hold Spanish and Italian debt has advanced to euro-era highs. Portuguese and Irish yields are also rising. Trichet holds a press conference at 2:30 p.m. in Frankfurt today after a policy meeting at which economists predict the ECB will leave its benchmark rate at a record low of 1 percent.

The final act in the drama before the EU curtain comes down. Imbalances are increasing beyond the ability of the ECB to maintain control. IR are rising to reflect risk and the degree of risk is growing worse by the hour. The beginning of the end may be underway this week.

Euros anyone? :o

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So far they want to keep kicking the can down the road. Enough bailouts to barely stop a default. But not willing to commit to go all the way.

Imo a compromise could be that if EU nations have their budget plans approved by the EU, they could qualify for the ECB buying the national bonds.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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