Gold Market Wire
News, analysis and commentary for gold traders and investors
ECB's Emergency Plan to buy Bonds Sends Prices Soaring
March 19 2020 - (Gold Market Wire) - The European Central Bank has released an emergency plan to buy more than 120 billion Euros of Government and Corporate Bonds over the next year. The move has caused Italian and Greek Sovereign Bonds to make sharp price gains after drastic falls in the past week.
But though Italian 10-year Bond Yields have fallen by 75 basis points (.75%) and Greek equivalent Bond Yields have fallen by almost 200 basis points (2%), the currency rout against the Euro is continuing unabated. The Euro has traded as low as 1.0725 against the US Dollar.
With a ban on the short-selling of government debt by the ECB they have cast themselves as the first, second and last buyer of all government debt in the EU. As the market cannot sell the Bonds, they are attacking the currency.
This type of selling is not going to abate any time soon. The Euro, flawed as a currency since its inception, is going to come under more and more pressure over the next weeks. After 1.05 the market will likely fall below parity.
The EU's flagship project lies in tatters. And it has nothing to do with the CoronaVirus - and everything to do with the EU and the ECB.