Benchmark
Here’s Why the Stakes Are Higher for the ECB’s QE Exit
Central bank’s bond buying has far outstripped new issuance, making it a bigger event for the market, Deutsche Bank says
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When it comes to quantitative easing, the European Central Bank may be trying to bite off more than it can chew.
The ECB is now buying seven times more bonds than the euro-area governments are adding to the market, according to calculations by Deutsche Bank economist Torsten Slok. To put it into perspective, Bank of Japan’s bond purchases currently outstrip new issuance by a factor of three. The demand coming from the Federal Reserve hasn’t exceeded supply since around mid-2002.