I wrote last week about the ECB’s renewed purchases of public Euro debt (in particular Spanish and Italian). Now the actual numbers are out, and the confirm what market participants signaled: The ECB was not in for a small operation.
The ECB purchased for around 22 billion Euros, thereby raising its stock of debt purchased under the Securities Markets Programme to 96 billion Euros. An unprecedented increase in the stock of almost 30 %. Today, the ECB will suck up the associated liquidity created (and will do so the next week, and the next . . . ).
From a weekly perspective, the operation appeared successful as bond yields have dropped to around 5% for both countries (although, of course, many bond yields went down last week). But is this really the objective of the ECB? “Bond yield targeting”?
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