Last Week The ECB Bought A Whopping €2.7 Billion In Sovereign Bonds

Tyler Durden's picture

When we announced last Monday that in the week ended December 6 the ECB bought €2 billion in bonds via its SMP program, we expected that the current week would see yet another major surge in bond purchases, due to last settlements.  Sure enough, according to just released ECB data, in the last week when bond turmoil was already supposedly contained, the ECB bought nearly  €2.7 billion in Irish, Portuguese and possibly Spanish and Belgian bonds: this is the highest amount since the first 2 weeks of the SMP program's inception and the highest by far in the past half year. Recall that while the absolute number is not large, it is material in relative terms as the European monetization scheme is the absolute fall back plan- don't forget the ECB funds domestic banks directly to in turn purchase sovereign bonds in the primary and secondary markets directly, very much like how our Primary Dealers operate in the US during UST auction time. As Zero Hedge reported last week, the only buyer of sovereign debt, via its MS proxy, is now the ECB. How long this centrally planned floor on prices persists will be up to bond vigilantes. Today, peripheral yields in both cash and CDS have once again started leaking wider, which can only mean one thing: many, many more purchases coming.

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Leo Kolivakis's picture

Call it P-envy (POMO envy)! :)

Shameful's picture

How could Trichet look across the pond at Zimbabwe Ben and not feel a little envy at "Big Ben"?  POMO: Bigger, Longer, and Uncut!

gwar5's picture

The Trichet Bernank?

SheepDog-One's picture

ECB Europes Copy of Bernanke? Monetize the whole world FLOAT this bitch a bit longer!

Thomas's picture

Stein's law is immutable.

NotApplicable's picture

Still though, that has no bearing on short term timing.

erik's picture

Taylor's call of EUR-USD to ~1.36 may just turn out true this week.  That would coincide with a USD at the 50 day MA most likely, which makes for a nice entry point.

Alex Lionson's picture

It seems to be a game of "who blinks first"

Shameful's picture

Yeah that's a lot of money, but somehow I'm underwhelmed.  Maybe after Zimbabwe Ben's performance this just comes off as weak.  If Trichet really wants to grab the worlds attention he is going to need to really dig down deep and buy a lot more trash.

youngandhealthy's picture

Whopping!?   It is a third of what FED is buying every day and will continue doing so until June next year. ECBs tally so far is approx €70Bn since May. That is probably what FED has monetized the last 2-3 weeks.

And ECBs operations are sterilized.

SheepDog-One's picture

How do you sterilize toxic waste, burn it?

Wolf in the Wilds's picture

Moral Hazard.  ECB is putting its balance sheet at risk now as the buyer of only resort of the the peripheral bonds.


Won't end well

Gimp's picture

How does this all end??  Everyone printing worthless IOU's? 

koeleköpke's picture

the scholar learned it from the master


Dadoomsayer's picture

Looks like everyone is pushing up asset prices.  Good times

Caviar Emptor's picture

It's the style of the times!! Gotta keep up with those Jones'. 

Supersize my debt financing! 

Goldenballs's picture

Who else would buy worthless toxic debt however its packaged.Just print and buy,what a joke.

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