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"The ECB was reported to be buying peripheral bonds yesterday.
This has flooded the secondary market for euro zone peripheral bonds.
That difference helps explain why, though both systems experienced problems after 2008 only the European system sank into serious financial crisis: demand for safe dollar assets when trouble struck while demand for riskier peripheral bonds tumbled (until the European Central Bank intervened decisively).Where does all this leave the world economy?
What I've been arguing for a while is that saving the euro requires two things: (a) large ECB purchases of peripheral bonds (or at least a declared willingness to do so, to cap yields), and (b) an indication that the ECB will be willing to allow higher inflation to make adjustment possible.
Modes associated with the peripheral bonds of the HPA were shifted to lower wave numbers when doped into PFSA membranes.
"Economically it is irrelevant but at least markets have had fun selling the euro and buying bank equities and peripheral bonds," said Alastair Winter, chief economist at Daniel Stewart.
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That monetary stimulus has also rippled through to Europe, pushing down peripheral bond yields, as Open Europe analyst Pieter Cleppe pointed out this week: There were other changes.
"The contagion risk to other economies is significant; we think that Grexit would lead to the reintroduction of a currency-risk premium and higher peripheral bond yields," said the consultancy Oxford Economics.
Youth unemployment rates in Greece and Spain are 55.6% and 54.2%, respectively.But peripheral bond yields are down, so presumably all is well.
Michael Hewson, chief market analyst at CMC Markets, said: A bigger than expected rise in November German retail sales and a drop in unemployment in December, has seen European equity markets enjoy a fairly strong session today, while strong demand for an Irish 10 year bond issue has also helped risk appetite across the board pushing peripheral bond yields lower across the board.
The pressure this places on peripheral bond yields will also raise the spectre of bailouts for Italy but particularly Spain with markets of the opinion that if the Spanish 10-year pushes above the 6% mark, this would raise alarm bells and force the hand of Rajoy's government to request a bailout from the ECB.
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