ECB to exacerbate extreme volatility

European Central Bank board member, Benoît Coeuré, has acknowledged that extreme volatility is a worrying sign of reduced liquidity. But even so, the central bank will step up its purchasing in a move that is expected to accelerate the exodus of real money demand from covered bonds. These investors will be the slowest to return when buying eventually stops. This will hit peripheral issuers the hardest, said analysts at Crédit Agricole CIB research.