TALIAN SOVERGIEN DEBT – BOND YIELD SPREADS – NEWS – Italian borrowing costs fall sharply as ECB launches $820 billion coronavirus package PUBLISHED THU, MAR 19 20202:47 AM EDTUPDATED 44 MIN AGO Silvia Amaro @SILVIA_AMARO KEY POINTS “Extraordinary times require extraordinary action,” ECB President Christine Lagarde said Wednesday on Twitter. The ECB had been criticized since Lagarde last week told a press conference that the bank’s role was not to close the spread in sovereign debt markets. The new asset purchase program will also include Greek securities. GP: Christine Lagarde 191212 Christine Lagarde, President of the European Central Bank (ECB), addresses the media during a news conference following the meeting of the governing council of the ECB in Frankfurt am Main, western Germany, on December 12, 2019. Daniel Roland | AFP | Getty Images Italian borrowing costs fell sharply Thursday morning as investors reacted to a massive new bond-buying program from the European Central Bank (ECB). The ECB on Wednesday evening announced a 750 billion euro ($820 billion) asset purchase program in an effort to help mitigate the impact of the coronavirus outbreak, as the death toll in Europe continues to rise. The central bank said that it would buy public and private securities to counter the “serious risks” of the coronavirus. The so-called Pandemic Emergency Purchase Program (PEPP) will last until the end of the year. The central bank had been criticized since Lagarde last week told a press conference that the bank’s role was not to close the spread in sovereign debt markets. Her comments sent Italian borrowing costs up as a result. Her predecessor, Mario Draghi, reassured financial markets in 2012 — the height of the sovereign debt crisis — that the ECB would do “whatever it takes” to save the euro. However, investors responded positively to the ECB’s latest coronavirus package. The yield on the 10-year Italian bond dropped to as much as 1.542% Thursday morning, having traded at 2.5% on Wednesday. Yields move inversely to bond prices. CNBC – Italy 10-year 200319 EU 10-Italian bond yield on Thursday morning. “Extraordinary times require extraordinary action. There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate,” ECB President Christine Lagarde said Wednesday on Twitter. The coronavirus, which started in China in late 2019, has brought the major euro economies to halt, with Italy, France, Spain and Belgium in total lockdown. Data has also shown that the virus has infected and killed more people in Europe than in China, The New York Times reported. Christine Lagarde ✔ @Lagarde Extraordinary times require extraordinary action. There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate. https://twitter.com/ecb/status/1240411016078536709 … European Central Bank ✔ @ecb Press release: ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP) https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html … 4,573 4:38 AM – Mar 19, 2020 Twitter Ads info and privacy 3,067 people are talking about this The new asset purchase program will also include Greek securities. Greek government bonds have not featured in the central bank’s previous asset purchase programs as they did not have enough investment credibility in the wake of the sovereign debt crisis. “We couldn’t hope for more. The inclusion of Greece and corporate commercial paper were the cherries on the QE (quantitative easing) cake,” Frederik Ducrozet, senior economist at Pictet Wealth Management, said in an email Wednesday. “Provided the fiscal response continues to build up, this looks like a game-changer for the euro area economy and markets,” Ducrozet added. The ECB surprised markets a week ago by not cutting interest rates as a way to boost economic activity during the coronavirus outbreak. Instead, the ECB unveiled new support to bank lending and expanded its asset purchase program by 120 billion euros ($135.28 billion). WATCH NOW VIDEO02:14 Lagarde: We will absolutely fight fragmentations in markets TRENDING NOW A medical worker wearing a face mask talks on her mobile phone inside the new coronavirus intensive care unit of the Brescia Poliambulanza hospital, Lombardy, on March 17, 2020. Italy’s coronavirus death toll spikes yet again as hospitals at the epicenter struggle to cope DALLAS, TEXAS – FEBRUARY 26: Team owner Mark Cuban looks on during a press conference to introduce Cynthia Marshall as the new Dallas Mavericks Interim CEO at American Airlines Center on February 26, 2018 in Dallas, Texas. Mark Cuban says bailed out companies should never be allowed to buy back their stocks ever again World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus talks during a daily press briefing on COVID-19 virus at the WHO headquaters in Geneva on March 11, 2020. WHO considers ‘airborne precautions’ after study shows coronavirus can survive in air An aisle of toilet paper is nearly empty at a Kroger grocery store . Shoppers have been panic buying toilet paper, hand sanitizer, paper towels, cold and flu medicine, and other items on Coronavirus epidemic fears. Why there will soon be tons of toilet paper, and what foods could be scarce: supply chain experts Trump wants to start sending millions of Americans a check. Here’s how to use it wisely

Italian borrowing costs fall sharply as ECB launches $820 billion coronavirus package

KEY POINTS
  • “Extraordinary times require extraordinary action,” ECB President Christine Lagarde said Wednesday on Twitter.
  • The ECB had been criticized since Lagarde last week told a press conference that the bank’s role was not to close the spread in sovereign debt markets.
  • The new asset purchase program will also include Greek securities.
GP: Christine Lagarde 191212
Christine Lagarde, President of the European Central Bank (ECB), addresses the media during a news conference following the meeting of the governing council of the ECB in Frankfurt am Main, western Germany, on December 12, 2019.
Daniel Roland | AFP | Getty Images

Italian borrowing costs fell sharply Thursday morning as investors reacted to a massive new bond-buying program from the European Central Bank (ECB).

The ECB on Wednesday evening announced a 750 billion euro ($820 billion) asset purchase program in an effort to help mitigate the impact of the coronavirus outbreak, as the death toll in Europe continues to rise.

The central bank said that it would buy public and private securities to counter the “serious risks” of the coronavirus. The so-called Pandemic Emergency Purchase Program (PEPP) will last until the end of the year.

The central bank had been criticized since Lagarde last week told a press conference that the bank’s role was not to close the spread in sovereign debt markets. Her comments sent Italian borrowing costs up as a result. Her predecessor, Mario Draghi, reassured financial markets in 2012 — the height of the sovereign debt crisis — that the ECB would do “whatever it takes” to save the euro.

However, investors responded positively to the ECB’s latest coronavirus package. The yield on the 10-year Italian bond dropped to as much as 1.542% Thursday morning, having traded at 2.5% on Wednesday. Yields move inversely to bond prices.

CNBC - Italy 10-year 200319 EU
10-Italian bond yield on Thursday morning.

“Extraordinary times require extraordinary action. There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate,” ECB President Christine Lagarde said Wednesday on Twitter.

The coronavirus, which started in China in late 2019, has brought the major euro economies to halt, with Italy, France, Spain and Belgium in total lockdown. Data has also shown that the virus has infected and killed more people in Europe than in China, The New York Times reported.

Christine Lagarde

@Lagarde

Extraordinary times require extraordinary action. There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate. https://twitter.com/ecb/status/1240411016078536709 

European Central Bank

@ecb

Press release: ECB announces €750 billion Pandemic Emergency Purchase Programme (PEPP) https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html 

3,067 people are talking about this

The new asset purchase program will also include Greek securities. Greek government bonds have not featured in the central bank’s previous asset purchase programs as they did not have enough investment credibility in the wake of the sovereign debt crisis.

“We couldn’t hope for more. The inclusion of Greece and corporate commercial paper were the cherries on the QE (quantitative easing) cake,” Frederik Ducrozet, senior economist at Pictet Wealth Management, said in an email Wednesday.

“Provided the fiscal response continues to build up, this looks like a game-changer for the euro area economy and markets,” Ducrozet added.

The ECB surprised markets a week ago by not cutting interest rates as a way to boost economic activity during the coronavirus outbreak. Instead, the ECB unveiled new support to bank lending and expanded its asset purchase program by 120 billion euros ($135.28 billion).

VIDEO02:14
Lagarde: We will absolutely fight fragmentations in markets

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