Deutsche Bank’s Woes Put $2 Trillion of Bonds Beyond ECB’s Reach
- Haven demand makes more sovereign debt ineligible for QE
- German 10-year bund yields fall for third straight week
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The troubles of Deutsche Bank AG are making European Central Bank President Mario Draghi’s job more complicated.
The surge this week in relatively safe sovereign securities left about a third of the Bloomberg Eurozone Sovereign Bond Index ineligible for purchase under the ECB’s quantitative-easing program. The gains mean $2.2 trillion of debt in the index now yields less than the institution’s deposit rate -- currently minus 0.4 percent -- and is therefore off-limits.