Read our market review and find out all about our theme of the week in MyStratWeekly with our experts Stéphane Déo, Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.
Topic of the week: ECB and its material impact on public debt
- The ECB has announced last week a further easing of monetary policy.
- The 500 billion increase in QE will result in the ECB purchasing more than the net issuance of souverain bonds next year. We estimate the amount of net government issues after ECB 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 despite ECB easing
- The ECB prolongs monetary accommodation
- Wobbly stock markets amid Brexit, US stimulus talks
- Sovereign spreads unchanged, Spain issues 10-year bonds at 0%
- iTraxx Crossover, high yield spreads move up
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