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Record purchase of bonds by the ECB

The European central bank revealed on Monday it bought for 22 billion € of sovereign debt last week as part of its plan of bond purchasing program, activated to stop the debt crisis contagion to other countries in the Euro area...

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While the markets had gone back down after the statements from a German government spokesman under which Eurobonds are not on the menu for Tuesday’s meeting between Nicolas Sarkozy and Angela Merkel, the European Central Bank has restored order in reporting the purchasing of 22 billion € of sovereign debt. This is the largest amount ever spent in one week by the ECB since the program began in March 2010. The first week, the ECB had then bought 16.5 billion € of Greek bonds.

The ECB has reactivated on August 4 this bond purchasing program, slumbering since March, despite opposition from four members of its Board of Governors.

The monetary institution immediately restarted its operations in the bond market, traders noting first, Irish and Portuguese debt purchases. it said four days later that she would "actively implement" the bond purchasing program to try to stem the debt crisis that is shaking the Euro area, noting also that it would intervene on Spanish and Italian bonds. The ECB action has allowed interest rates from Roma and Madrid to ease, the return on their ten years borrowing hovering around 5% today against more than 6% earlier. the Bund volatility fell slightly over the past week end with an implied volatility at 10.38 in late afternoon against 11.61 and 10.66 on last Thursday and Friday, with a range of 67 ticks to 140 ticks in average these last 20 days.

Next Finance , August 2011

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