Failure to print money could reverse periphery rally, analysts warn

By Craig McGlashan
24 Apr 2014

Ever heavier hints by European Central Bank officials that they could bring quantitative easing to the eurozone to tackle deflation may have helped a pair of eurozone periphery sovereigns to hold yield-busting bond auctions this week — including Portugal’s first in three years. But if the central bank rules out buying government bonds as part of a QE programme, it could risk damaging the remarkable rally in periphery debt since the start of the year, analysts warned this week.

And unlike in July 2012, when ECB president Mario Draghi’s simple pledge to do “whatever it takes” to save the currency bloc sent peripheral eurozone sovereign bond yields on a downward trajectory without the central bank lifting a finger, Draghi may not be able to rely on just ...

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