The control of central banks on the bond market is growing

Posted on Dec. 2020 at 7:00

It is a number that makes you dizzy. The big central banks have injected, since the beginning of the year, more than 6.5 trillion dollars in the markets via their programs of purchase of titles (QE). The US Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank (ECB) have bought bonds, mainly government debt. But not only. Breaking with its previous doctrine, the Fed even came to the aid of badly rated bonds, “junk bonds”, by acquiring listed index funds (ETFs) relating to this asset class.

In Europe, the “pandemic emergency” purchasing program (PEPP), initially endowed with 750 billion euros, but the envelope of which has now reached 1.850 billion euros, first of all made it possible to restore calm to the European market. debt, but also to offer governments exceptional borrowing conditions. All German rates are moving into negative territory, and France has financed under 0% this year. Portuguese and Spanish 10-year rates have turned very slightly positive again but are flirting with this symbolic threshold.

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