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10 Apr 2015
Never ending QE form the ECB?
FXStreet (Guatemala) - Analysts at RBS warned to be careful betting on never ending QE form the ECB.
Key Quotes:
"Some appear to believe that the debt burden will be managed and sovereign spreads compressed by chronic central bank purchases of government debt."
"But in a macroeconomic scenario in which the Eurosystem is obliged to keep buying bonds for years to come (and presumably bust through the 25% issue limits) in order to achieve price stability the news on the debt burden may have resurrected sovereign stress."
"Otherwise, you are betting on fiscal dominance – and we wouldn’t make that bet."
Key Quotes:
"Some appear to believe that the debt burden will be managed and sovereign spreads compressed by chronic central bank purchases of government debt."
"But in a macroeconomic scenario in which the Eurosystem is obliged to keep buying bonds for years to come (and presumably bust through the 25% issue limits) in order to achieve price stability the news on the debt burden may have resurrected sovereign stress."
"Otherwise, you are betting on fiscal dominance – and we wouldn’t make that bet."