30 Jan 2015
"What about negative yields?" - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank noted that in the Q&A session that accompanied the QE announcement Draghi was asked whether the ECB would consider buying bonds whose yield was in negative territory – to which he replied ‘yes’.
Key Quotes:
"We will assume that this meant ‘yes, we can do that’ rather ‘yes, we are still considering that’."
"However, this does not rule out that there could still be a reticence amongst the NCBs of those countries with negative yielding bonds to buy them. If such a reticence was expressed it would be a clear curve flattener as it would skew QE purchases further along the curve."
"For those countries that have them, the volume of eligible negative yielding bonds as a percentage of the eligible debt stock. Meanwhile chart 7 shows the outright volume of eligible negative yielding bonds in each country (with, notably, the figures for Germany being only marginally greater than for France due to the latter’s bigger debt stock)."
Key Quotes:
"We will assume that this meant ‘yes, we can do that’ rather ‘yes, we are still considering that’."
"However, this does not rule out that there could still be a reticence amongst the NCBs of those countries with negative yielding bonds to buy them. If such a reticence was expressed it would be a clear curve flattener as it would skew QE purchases further along the curve."
"For those countries that have them, the volume of eligible negative yielding bonds as a percentage of the eligible debt stock. Meanwhile chart 7 shows the outright volume of eligible negative yielding bonds in each country (with, notably, the figures for Germany being only marginally greater than for France due to the latter’s bigger debt stock)."