Group Economics
Daily Insight
Macro & Financial Markets Research Maritza Cabezas , Kim Liu
ECB purchases remain on track
+ 31 20 343 5618
5 May 2015
ECB purchases are still going strong, no signs of scarcity to be seen Weak China factory activity calls for additional easing measures to stabilise economy
ECB purchases still going on strong
China’s HSBC PMI calls for additional easing
The ECB announced that, under the Public Sector Purchase
index
Programme (PSPP), it bought a total of EUR 47.7bn of public
60
sector bonds in its second month. In total, the central bank bought an amount of EUR 60.326bn, which means that it
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achieved its monthly target. The difference between the amount spent on PSPP bonds and the total target are purchases of ABS and Covered bonds. The average remaining
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maturity of the public sector bonds was 8.25 years which is 30
marginally lower than in the previous month.
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PSPP holdings are based on the ECB capital key
07
08
09
10
11
Official PMI
12
13
14
15
HSBC PMI
The data shows that the lion share of the PSPP holdings Source: Thomson Reuters Datstream
consist of German public sector bonds. Also holdings of France, Italian and Spanish debt are significant. The data confirms that PSPP purchases follow the ECB capital key.
China’s HSBC PMI drops in April China’s HSBC/Markit PMI dropped below expectations in April
Peripheral bond buys still have a longer maturity
to 48.9 from 49.2 the previous month. New orders declined at
The data also shows that peripheral bond buys have on
the strongest pace in a year, while production levels stagnated.
average a higher remaining maturity than core bond buys. The
The components suggest that weak domestic demand was the
remaining maturity of Portuguese debt is the highest of all
main driver of reduced new business, as new export work
holdings at 10.77 years. Purchases of so called core bonds of
picked up a bit in April. Meanwhile the official PMI survey
countries like Germany, Finland and most notably Holland
released on Friday was unchanged from the March reading.
have the lowest remaining maturity. This implies that core
The official number of 50.1 was the weakest reading for the
central banks skewed their purchases towards shorter
month of April since 2005. January-March data are usually
maturing bonds. This was also the case in the first month.
distorted as a result of the Chinese New Year. The official survey suggests that new orders were unchanged and
Total ECB PSPP holdings EUR bn
production increased slightly compared to the previous month. Average remaining maturity in years
25
12
20
10
15 10 5 0 FR
IT
SP
NL
BE
Amounts bought (lhs)
Source: ECB
AT
PT
Maturity (rhs)
FI
IR
This slow start going into the second quarter supports the case for a new round of stimulus measures to maintain GDP growth
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on track. Last week, the Politburo, the Communist’s Party’s top
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decision-making body, said that authorities will step up policy
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adjustments and urged further tax cuts. We stick to our growth
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forecast of 7% for 2015, which is in line with the authorities’
0 DE
Additional easing measures to stabilise economy
target announced in March.