Collateral Scarcity That Stalked Europe’s Repo Market Is No More
- Gap between yields and interest rate on swaps narrows markedly
- Strategists at Societe Generale, RBC expect trend to continue
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Europe’s safest assets are in ample supply once again after years of shortages that spooked authorities and raised concerns about the health of the region’s money markets.
The European Central Bank is primarily behind the influx of German sovereign debt since it started shrinking its balance sheet last year. Record bond sales by the government in Berlin, the region’s most credit-worthy borrower, have added to the pile.