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- The ECB is Clearly NOT Hawkish
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- Trump’s Proposal “Print the Money” Echoes Franklin and Lincoln
- Japan's Helicopter Money Play
- Brexit and the Derivatives Meltdown
- Central Banks Gaming
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- Reinventing Banking
- Negative Interest, the War on Cash, and the $10 Trillion Bail-in
- The Future of Central Bank Monetary Policy
- Jeremy Corbyn’s Controversial Quantitative Easing Proposal
- Central Bank Season Heats Up
- Reserve Bank of New Zealand Rate Decision
- What has the ECB been Buying
- Four Central Banks Meet but FOMC is the Key
- Federal Overnight Reserve Repurchase Repo and Fed Funds Implications for 2015
- BoJ and ECB expected QE policies
- Unfitting Policies Will Not Save the Euro-area or Japan in 2015
- Can the $40 Drop In the Price of Oil Bankrupt the Biggest Banks?
- New G20 Banking Rules
- Central Banks Are Playing the Stock Markets
- A Public Bank Option for Scotland
- Preparing To Asset-strip Local Government The Fed’s Bizarre New Rules
- The Fed could Keep Rates at Zero through 2015
- Are Public Banks Unconstitutional? No. Are Private Banks? Maybe.
- New Challenges for an Old FED
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What has the ECB been Buying?
The ECB is a month into what it has signaled will be at least an eighteen month asset purchase program. It had begun buying asset-backed securities and covered bonds earlier, but starting last month began buying sovereign and supranational bonds.
As of April 3, the ECB settled 4.89 bln euros of ABS purchases, 65.67 bln euros of covered bond purchases and 52.52 bln euros of public bonds (sovereigns and supranational bonds).
Even though the public bond purchases were not initiated until the second week of March, the ECB aggressively pursued it objective and settled roughly 60 bln euros of assets last month. This was composed of 5.68 bln euros of supranational bonds and 41.68 bln of government bonds and about 2.6 bln euros covered bonds/ABS.
The average maturity of the government bonds the ECB has purchased is about 8.5 years. There is some variance. Lithuania, Latvia, and Slovenia purchased with a weighted average of less than 6.5 years before maturity. The Netherlands average is about 6.75 years. Spain and Portugal are on the other side, with average maturities about 11.6 years and 11.0 years respectively.
The sovereign bond purchases are weighted by the capital key, which is their contribution to the ECB and is roughly proportionate with the size of their economy. As of March 31, 11.06 bln of German bunds were purchased. The weighted average maturity is 8.1 years. France is second with 8.75 bln of bonds purchased and an average maturity of 8.22 years. Italy, the third largest, bought 7.6 bln euros of government bonds. The average maturity was a little more than 9 years.
Around 5% of the bonds the Eurosystem will buy have been bought. Therefore, one should not draw hard and fast conclusions about the maturity structure. However European central banks are most interested in driving down long-term interest rates. The core countries especially appear to be minimizing the purchases securities bearing negative interest rates.