Silver as an investment

The ECB’s QEnundrum: Draghi May Run Out Of Bonds To Buy As Soon As November

zerohedge.com / by Tyler Durden / Sep 8, 2016 12:53 PM

Yesterday we pointed out the many “Conundrums Of A Policy Maker” which focused on the waning ability of central banks and sovereign governments to continue to control asset prices as their traditional forms of stimulus are reaching the end of their useful life.  As proof of just how ineffective the marginal stimulus from Central Banks has become, the Financial Times points out this morning that the ECB will likely have bought every dollar of eligible debt available by the end of this year under its $1.6 trillion QE program.

As the FT points out, there is about $7.5 trillion of government and agency paper outstanding in the EU.  That said, the ECB is restricted to purchasing bonds with maturities ranging from 2-30 years and with a yield above the eurozone’s deposit rate of -0.4%.  According to FT calculations, those restrictions eliminate roughly $1.5 trillion of eligible paper.  Moreover, the ECB is also restricted from purchasing more than 33% of any given issuance or of a single country’s outstanding debt which reduces total supply of eligible paper further to just $2.0 trillion which is only slightly more than the $1.6 trillion approved for the QE program.

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