ECB says bond supply no problem
The ECB is scheduled to buy €700 billion of government bonds by the end of Sept 2016. Next week, most economists expect them to ratchet the total above €1 trillion.
It might be harder than it seems.
Reuters reports that €1.7 trillion Eurozone government bonds are now trading with a negative yield, that's almost 30% of the total outstanding.
If it wasn't a problem then the ECB wouldn't be mulling buying municipal bonds or risking non-payment on buying bank loans.
Besides, what's the point of QE? If it's to drive down yields in order to encourage lending then the job is essentially done. German 10-year yields are at 0.46%. At some point lowering yields, even into negative territory, isn't going to lower the cost of corporate borrowing, it just saps money from financial companies and pensions who are forced to buy bonds anyway. Governments may have a bit more to spend but austerity is still in full force.
It's plain FX manipulation at this point.
