oeure, ECB, worried about rapid reversal of bond prices
FRANKFURT (Dow Jones) – The recent change in the trend of bond prices is worrisome for the speed at which has occurred, said Monday Coeure Benoit, member of the executive board of the European Central Bank.
Coeure also said the central bank would move some of its purchases under the program of quantitative easing by the reduced liquidity in the market in mid-year months and not by market conditions.
“I do not consider the recent reversal in the price of bunds and other sovereign bonds of concern” because it reflects a correction in the market and a more optimistic growth outlook, Coeure said. “What worries me more is the speed of this reversal,” he added. “After several similar episodes, is another incident of extreme volatility in global capital markets show signs of a reduction in liquidity.”
Coeure said the ECB is aware that there are seasonal patterns in the fixed income market and are usually accompanied by less liquidity in the market from mid-July through August. “The Eurosystem takes this into account when applying its expanded program of purchases as forward its purchasing activity in May and June,” he said.
This will allow the central bank to keep their average monthly purchases worth 60,000 million euros “but buy less in the summer.”
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