El-Erian Warns of QE Market Distortion as Italy’s Bonds End Drop
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Italy’s government bonds halted a two-day decline as Allianz SE chief economic adviser Mohamed El-Erian said the European Central Bank’s planned debt-buying program is causing market distortions.
The yield premium investors demand to hold Italian 10-year securities over equivalent German bunds will decrease in the short term, said El-Erian, who is also a Bloomberg View columnist. The spread already narrowed to the tightest since May 2010 on Monday as investors anticipated the start of the ECB’s quantitative easing program this month. ECB President Mario Draghi is set to outline details of the plan after policy makers meet in Cyprus Thursday. Spanish 10-year bonds rose for the first time in three days.