One thing the ECB has been masterful at doing is pressuring European bond yields lower. How low you ask? Well, a 0.05% yield on a 10-year German bund — which is not only a record all time low but also begs the question of who in the right mind would lend the German government money for 10 years in return receiving 5bp of their principal each year as interest. You'd be surprised at how much demand there is for these zero or even negative yielding bonds!
Why? Simple. Front running the ECB's PSPP (QE). Tomorrow, 8 June, the bank will officially start purchasing non-financial EUR IG corporate bonds from the secondary market. This oaths first time in history that the ECB would be monetizing private assets under a large scale asset purchase program.
So not only are European sovereign yields plunging to record lows, way past their levels before the onset of the European Sovereign Debt Crisis, European corporate bond yields are also following suit. Now that there's always going to be a buyer of first and last resort for corporate debt, investors can care much less about the risks involved. Right?
#Forex #Stocks #Trading #Investing #Money #Europe #ECB #QE #ZIRP
Why? Simple. Front running the ECB's PSPP (QE). Tomorrow, 8 June, the bank will officially start purchasing non-financial EUR IG corporate bonds from the secondary market. This oaths first time in history that the ECB would be monetizing private assets under a large scale asset purchase program.
So not only are European sovereign yields plunging to record lows, way past their levels before the onset of the European Sovereign Debt Crisis, European corporate bond yields are also following suit. Now that there's always going to be a buyer of first and last resort for corporate debt, investors can care much less about the risks involved. Right?
#Forex #Stocks #Trading #Investing #Money #Europe #ECB #QE #ZIRP