By DB's chief credit strategist Jim Reid
As the ECB adds yet more stimulus to the system today at their meeting, this week has seen more landmark European bond moves. Italian 5-year yields have turned negative for the first time alongside 10-year Portuguese yields. And this morning Spanish 10-year yields also dipped into negative territory for the first time, albeit for a brief period.
In today’s Chart of the Day: we show 200 plus years history of Spanish and Portuguese 10-year yields (with proxies to allow a long history) to show how monumental these moves are.
The graph shows annual numbers but Portuguese yields traded above 18% in 2012 during the Sovereign debt crisis so this shows how much the ECB has turned this around.
However, will they ever be able to extricate themselves from these policies? Only time will tell but it will be incredibly hard and QE in some form will likely be here for many years to come.