by Ed Bugos, Dollar Vigilante:
Yesterday the European Central Bank (ECB) announced an expanded 1.1 trillion euro (US$1.3 trillion) asset purchase program to start in March 2015 and continue through September 2016 (19 months) that will include the purchases of sovereign (national government) debt. It plans to purchase roughly 60 billion euros ($68 billion) worth of securities monthly, up from about 13 billion, with most of the additional purchases to be allocated to sovereign (national government) debt with a quarter expected to end up in scarce German bunds. The purchases will be restricted to investment grade issues, which would mean no purchases at all if the condition were applied diligently, and will include non investment grade issues like Greek bonds if they have an ongoing budget/spending agreement with the ECB-IMF in place.
The purchases will be limited to covered bonds, asset backed securities, and government debt (i.e., equity not included). A day prior, the Bank of Japan (BOJ) announced that it was going to continue its own asset purchase program (mainly JGB’s), forcing insurers and other institutions to seek yields abroad.
Please follow SGT Report on Twitter & help share the message.