German Bonds Remain Scarce Even as ECB Trims Its Stockpile
- Repo rates, asset-swap spreads show bunds hard to source
- Years of QE have reduced supply of high quality, liquid bonds
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German bonds are still expensive to find in the open market, even after the European Central Bank reduced its mammoth holdings.
The central bank’s net holdings of German public sector securities decreased by over 14 billion euros ($14.2 billion) in the two months through July, according to data released this week. Quantitative-easing has long been cited as a cause of bund scarcity, which has warped rates markets for years.