Saturday , 16 January 2021

MBS RECAP: We’ve Only Just Begun (to See ECB QE Volatility)

By Matthew Graham

Posted To: MBS Commentary

Some time between yesterday’s European Central Bank (ECB) announcement and this morning’s open, market participants decided to interpret the QE program as buying a fixed amount of bonds of Eurozone countries based on their weighting (aka “capital key”) in the ECB. While the statement does indeed say that purchases will be based on the capital key, it doesn’t specify whether that refers to maximum eligible purchases or a flat guarantee to split the €60bln according to the key. The latter seems to be the consensus. That means that Germany, France, and Italy will receive nearly half of the purchases. This would more than explain the roaring move to new all-time low yields in German Bunds when QE was ostensibly about lifting up the periphery. But perhaps this is the price…(read more)

Forward this article via email: Send a copy of this story to someone you know that may want to read it.

Via:: MBS RECAP: We’ve Only Just Begun (to See ECB QE Volatility)

      

Comments

About Mortgage News Daily

Mortgage News Daily

Check Also

How To Treat Your VA

At my appraisal company, Appraisal Precision, we pride ourselves on completing our assignments timely and …