"Today's announcement of the third-coming of the messiah-like Draghi's
Bond-Buying program - even if under a different, more catchy, name - brings to
mind a chart we offered by way of genuine concern the last time he mentioned
this as an option. While he insists it's different this time (
because
they'll tell us the CUSIPs? we already knew when they were in;
because
its conditional? and revocable and who trusts their data;
because its
at the short-end? simply crushing up sovereign funding capabilities and
leaving the roll/liquidity needs even greater; Unlimited? we don't remember a
limit before?), it is clear that
the immediate gaps tighter in bond
yields (and spreads) on the announcement of the program was the best it ever was
and bonds sold off through each of the previous two SMP efforts. Just
saying...
Spanish and Italian bond yields (upper pane) versus the volume of ECB bond
buying (lower pane).
...which in aggregate is around the same size that the market implied it was
expecting - yields moved from ~4% to over 6.5% as the ECB soaked up over
EUR250bn..."
at
http://www.zerohedge.com/news/gentle-reminder-effectiveness-prior-ecb-bond-buying
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