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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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Mon, 12/13/2010 - 10:43 | 801412 Leo Kolivakis
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Call it P-envy (POMO envy)! :)

Mon, 12/13/2010 - 10:58 | 801441 Shameful
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How could Trichet look across the pond at Zimbabwe Ben and not feel a little envy at "Big Ben"?  POMO: Bigger, Longer, and Uncut!

Mon, 12/13/2010 - 11:10 | 801457 mikla
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Mon, 12/13/2010 - 10:44 | 801416 gwar5
gwar5's picture

The Trichet Bernank?

Mon, 12/13/2010 - 10:45 | 801421 SheepDog-One
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ECB Europes Copy of Bernanke? Monetize the whole world FLOAT this bitch a bit longer!

Mon, 12/13/2010 - 10:48 | 801424 Thomas
Thomas's picture

Stein's law is immutable.

Mon, 12/13/2010 - 14:32 | 802071 NotApplicable
NotApplicable's picture

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

Mon, 12/13/2010 - 10:52 | 801433 erik
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.

Mon, 12/13/2010 - 10:52 | 801434 Alex Lionson
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It seems to be a game of "who blinks first"

Mon, 12/13/2010 - 10:56 | 801438 Shameful
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.

Mon, 12/13/2010 - 11:00 | 801442 youngandhealthy
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.

Mon, 12/13/2010 - 11:53 | 801549 SheepDog-One
SheepDog-One's picture

How do you sterilize toxic waste, burn it?

Mon, 12/13/2010 - 11:07 | 801453 Wolf in the Wilds
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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

Mon, 12/13/2010 - 11:19 | 801476 Gimp
Gimp's picture

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

Mon, 12/13/2010 - 11:25 | 801488 koeleköpke
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the scholar learned it from the master


Mon, 12/13/2010 - 11:25 | 801490 Dadoomsayer
Dadoomsayer's picture

Looks like everyone is pushing up asset prices.  Good times

Mon, 12/13/2010 - 12:01 | 801568 Caviar Emptor
Caviar Emptor's picture

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

Supersize my debt financing! 

Mon, 12/13/2010 - 13:28 | 801852 Goldenballs
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Who else would buy worthless toxic debt however its packaged.Just print and buy,what a joke.

Mon, 07/25/2011 - 06:34 | 1489993 cindycheng
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