Government debt issuance set to dwarf ECB reinvestments

Reinvestments from the ECB’s asset purchase programmes, a key monetary policy instrument going forward, could offer important support for smaller periphery sovereigns, but not much for Italy or Spain.

What you will learn:

• We expect net asset purchases under the ECB’s asset purchases programmes to end by July.
• This will be a major change after seven years during which the ECB bought more sovereign debt than governments issued, becoming the most important player in the sovereign bond market.
• The potency of reinvestments to prevent an unsustainable rise in spreads within the eurozone can be bolstered in two ways.