Is end nigh for ECB’s PEPP?

Is end nigh for ECB’s PEPP?

Eurozone government bond yields have risen in recent weeks, with inflation and economic indicators in the single currency bloc beating expectations.

That’s leading investors to bet the ECB will have to begin the debate on ending the pandemic emergency purchasing program (PEPP), possibly even at next Thursday’s policy meeting.

Greek government bonds have been hit particularly hard by the PEPP speculation, given non-investment-grade Greece was included in ECB purchases for the first time under PEPP.

Greece’s 10-year borrowing costs have risen nearly 20 basis points from August lows. They rose 1.5 bps to a near two-month high at 0.764% on Friday.

Long-dated bonds are seen as beneficiaries of ECB largesse and the hunt for yield, and they tend to suffer the most on speculation of monetary policy tightening. [Reuters]

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