Last week the ECB reported that its balance sheet expanded by €11.26 billion to €3.249 trillion.
What is the makeup? How has that increased over time? What is the ECB doing now?
ECB Balance Sheet Expansion Since 2007
Balance Sheet Makeup Year End 2015
(Click on image to enlarge)
The above chart from Europa, anecdotes by Mish.
Adventures in QE
On March 10 2016, the ECB announced it would start buying corporate bonds.
At that time, Bloomberg reported Next Stop on ECB QE Adventure: $980 Billion Corporate Debt.
The next target for the European Central Bank’s expanding asset-purchase program: the region’s 900 billion-euro ($980 billion) corporate-bond market. “This is no doubt a credit bazooka,†said Lyndon Man, a fund manager at Invesco Ltd., which manages $737.5 billion.
Bang for the Euro
Today the Financial Times reported ECB Gets Bang for its Euro in Corporate Bond-Buying.
Prices of European corporate bonds have risen since the European Central Bank announced in March it would begin to buy them but, in what may be a sign of the effectiveness of the programme so far, the price of bonds purchased have risen further.
“It’s working even more than you would anticipate,†said Hans Lorenzen, global head of credit products strategy at Citigroup.
Shortly after it was announced, there was a rapid appreciation in the value of bonds predicted to be eligible, diverging from those judged outside the ECB’s criteria. Companies rushed to sell new bonds, including a record €13.25bn offering to fund brewer AB InBev’s takeover of rival SABMiller.
“We’ve had the risk events and the market doesn’t seem to care,†said Chris Telfer, a portfolio manager with ECM asset management. “Everything is trading like it’s being bought [by the ECB] anyway,†Mr Telfer said. “Fundamentals don’t seem to matter; I don’t know anyone who feels comfortable buying into this.â€
