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Ecb Purchases €22 Billion Of Italian, Spanish Bonds In Past Week, Highest Weekly Amount Ever

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The ECB just disclosed its much anticipated weekly purchases under the SMP (or direct monetization) program, which at €22 billion came well above expectations of €15 billion, and represents the biggest weekly total in the 66 weeks of purchases under the program...


Well it's not like the ECB is propping up the market and de facto keeping the German/French banks afloat....

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And for the thought police:


The first tricky thing here is that the ECB probably bought bonds on Thursday and Friday last week, which might not show up in the current data because of the time the purchases take to be settled. Therefore it might be a second week before we know the actual number.

Although the second tricky thing here is that the ECB will have to continue buying in strength in such a huge market as Italy’s – so ultimately weeks two or three or four will provide an equally key guide to its strategy. Once you get on the treadmill of keeping the Italian bond market liquid, you can’t jump off. There’s a further €2,155bn of combined Italian and Spanish debt to force into price stability in the coming weeks, even if the ECB bought €15bn last week.

When it comes to shock and awe and the really big numbers of the refinancing needs for Italy and Spain, though…


In that case a few billions here or there wouldn’t matter. The ECB could go into trillions if it wanted (and actually, finance the EFSF’s transition into bond-buying — something that’s quite plausible we think, but not often discussed).

Still it won't go Weimar....

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  • 429 Brexit, House prices and Summer 2020

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