ECB Update: Italian bonds not over-represented in December-January purchases
- Data on PEPP transactions in December and January show a clear decline in QE purchases. In December-January, the total net purchases in the PEPP was 110 bn euros, roughly 23 bn less than in October-November and far below top levels seen during summer 2020. Calmer holiday weeks impact the monthly figures, however. Hence this should be interpreted as a temporary more technical slowdown.
- The share of Italian bonds in the PEPP continued to revert towards the capital key during January, indicating that the ECB has not been buying more Italian government bonds in order to push down spreads.
- In January, almost 75% of total purchases was done through the PEPP and the rest through the APP. The PEPP program is taking an even larger role, as the temporary 120 bn envelope in the APP ended in December.
- Almost 95% of purchases within the PEPP programme have been public sector bonds through the whole programme, and in December-January the share was even larger.
- PEPP public sector holdings are still mostly reverting towards the capital key. France remains the biggest outlier, while also Germany’s share of public sector purchases is clearly below the capital key.
- In December, the ECB added 500 bn euros to the Pandemic Emergency Purchase Programme (PEPP). At the end of January, there was over 1000 bn euros left in the PEPP program.
Heidi Schauman, email@example.com, +358 50 328 1229
Sonja Liukkonen, firstname.lastname@example.org, +358 400 092159