Topic of the week:and its material impact on public debt
- The has announced last week a further easing of monetary policy.
- The 500 billion increase in QE will result in the purchasing more than the net issuance of souverain bonds next year. We estimate the amount of net government issues after purchases at -390 billion euros in 2021.
- In addition, and despite the large increase in debt next year, low interest rates will lead to a decline in debt service. Each of the four major Euro Area countries will save several billions in debt service next year.
Market review: Volatility picks up despiteeasing
- The prolongs monetary accommodation
- Wobbly stock markets amid Brexit, US stimulus talks
- Sovereign unchanged, Spain issues 10-year bonds at 0%
- iTraxx Crossover, high yield move up
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