ECB Can Tackle Greece Contagion Through Targeted Bond Buys: JPM
2015-06-28 19:04:24.613 GMT
By Deborah L Hyde
(Bloomberg) -- The ECB pledge today to use all instruments
available “within its mandate” has even greater power due to
the recent ruling of the ECJ, JPMorgan analyst Greg Fuzesi
writes in client note.
* The ruling gave the ECB broad discretion and thus opens the
door to buying targeted at the bond markets of specific
countries affected by contagion and unaffected by ESM
conditionality (an Anti-Contagion Purchase Programme, or
ACPP)
* Could pledge to intervene in a country’s bond markets if
its bond yields have increased above a level justifiable
by domestic fundamentals; could be time-limited until
the Greek situation is more resolved; may never need to
be activated
* What ECB chooses to do will depend on whether any contagion
occurs via bond markets or via banks, and how it is
distributed across countries so will likely keep an open
mind until it sees how financial markets respond
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Deborah L Hyde in London at +44-20-3525-4829 or
dhyde10@bloomberg.net
To contact the editors responsible for this story:
Deborah L Hyde at +44-20-3525-4829 or
dhyde10@bloomberg.net
Joanna Ossinger
2015-06-28 19:04:24.613 GMT
By Deborah L Hyde
(Bloomberg) -- The ECB pledge today to use all instruments
available “within its mandate” has even greater power due to
the recent ruling of the ECJ, JPMorgan analyst Greg Fuzesi
writes in client note.
* The ruling gave the ECB broad discretion and thus opens the
door to buying targeted at the bond markets of specific
countries affected by contagion and unaffected by ESM
conditionality (an Anti-Contagion Purchase Programme, or
ACPP)
* Could pledge to intervene in a country’s bond markets if
its bond yields have increased above a level justifiable
by domestic fundamentals; could be time-limited until
the Greek situation is more resolved; may never need to
be activated
* What ECB chooses to do will depend on whether any contagion
occurs via bond markets or via banks, and how it is
distributed across countries so will likely keep an open
mind until it sees how financial markets respond
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Deborah L Hyde in London at +44-20-3525-4829 or
dhyde10@bloomberg.net
To contact the editors responsible for this story:
Deborah L Hyde at +44-20-3525-4829 or
dhyde10@bloomberg.net
Joanna Ossinger