In Mario Draghi last speech not only decreased deposit interest rates to -0,5%, but reborn quantitative easing in total amount of 20 billion per month. What does it mean? ECB buys government bonds but in second wave they buy corporate bonds of companies with the BBB rating and higher.
The main idea of the QE is to support loans, but as we saw last time the bigger impact it will have on the secondary market. As we can see on the Japan economy first and every next QE has lower impact on the loans and higher on the market.
We have had a bumper year of corporate supply, largely due to low financing costs in Europe. YTD 2019 issuance has been €476bn (up 27% from last year). This week the ECB will reveal purchases in last week. We will see how what new is it their balance sheet.
