CBs to price through swaps if QE comes

By Bill Thornhill
28 Aug 2014

European inflation, as well as expectations of inflation, is continuing to fall, and the European Central Bank is likely to announce a quantitative easing (QE) programme in December, economists told GlobalCapital on Thursday. With core eurozone yields set to tumble ever further, the allocation of real money demand to the currency bloc’s periphery will accelerate and pricing of core covered bonds could become established at sub-Euribor levels.

The allocation of core covered bond deals to real money accounts has been falling since the third quarter of 2013, according to new analysis published by Commerzbank covered bond research analyst Ted Packmohr on Thursday.

“The broad basis for core countries appears fragile,” Packmohr said

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