Scott Thiel, head of European & Global Bonds at BlackRock is out in a Reuters story:

  • Market is taking for granted the ECB will buy government bonds
  • Investors buying more Italian and Spanish government bonds on expectations the ECB will buying them are making a “mistake”

Reminder: The ECB hired Blackrock to run its ABS program.

“The market is very much taking for granted that quantitative easing through a government bond purchase programme is coming and I think there are many, many obstacles to that still to come,” Scott Thiel, who oversees assets worth around $100 billion for BlackRock, told Reuters.

“If people are buying Spanish and Italian bonds because they think the ECB is going to buy them from them, I think that is a mistake.”

The point of QE at this time would be to weaken the euro. Debt markets aren’t connected to sovereigns like in the US and German 10s are yielding a paltry 2.41%.