Courtesy of Mish.
In the totally mad goal of creating “confidence” via higher inflation, the ECB’s €1.1 Trillion Buying programme Begins.
Although the ECB’s bond buying programme is intended to lift inflation and boost confidence, the rise in bond yields that usually accompany higher inflation may not manifest due to the size of the plan, say bankers.
The size of the eurozone’s quantitative easing programme is expected to squeeze the supply of debt traded on markets to such an extent that yields could instead continue to fall.
Zoso Davies, credit strategist at Barclays, said the ECB’s asset purchases would outstrip the net supply of bonds in the targeted area by a factor of three-to-one, shrinking them by €840bn.
ECB, Bank of Japan to Buy 100% or More of Net Issuance
Last October, Bloomberg reported BOJ Stands Ready to Buy Every New Bond Abe’s Government Issues.
Starting today, the ECB will top that for Germany. Zerohedge provides this chart.
Yields on German bonds are already negative out to 6 years.
German 6-Year Bonds
German 7-Year Bonds
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