FRANKFURT (MNI) – The European Central Bank decreased its
purchases of sovereign EMU debt last week, the ECB announced Monday.
The bank purchased only E113 million worth of bonds through last
Friday, January 7, it said. The figure was below the E164 million in
purchases made the prior week.
The announcement comes amid market chatter that the central bank is
buying up assets from embattled peripheral Eurozone countries. Such
rumors, which the ECB never comments on, drove the yield on the
Portuguese 10-year OT benchmark issue below 7.00% in afternoon trading.
This yield is considered the threshold level that Greece and Ireland
both breached prior to requesting aid from the EU and IMF.
Over the weekend, German media reported that Germany and France
were pushing Portugal to accept a rescue package from the EU and IMF.
German Finance Minister Wolfgang Schaeuble rejected that suggestion
earlier today, saying, “we’re not pressuring anyone” and assuring that,
“we will defend the euro.”
The return of peripheral tensions combined with light bond market
trading last week suggests that the total amount settled this week, to
be announced next Monday, will be higher.
The bond purchases made over the past week increased the cumulative
total of ECB bond buys to E74.0 billion, rounded to the nearest
half-billion, which the central bank said that it would reabsorb in a
quick tender to collect one-week term deposits.
The operation, to be conducted on Tuesday at 10:30 GMT, will be in
the form of a variable-rate tender with a maximum bid rate of 1.00%, the
bank said. The liquidity will be held for one week at the ECB in term
deposit. The fixed-term deposits can be used as collateral in the
Eurosystem’s refinancing operations.
The central bank also said it intends to hold another
liquidity-absorbing operation next week.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
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