Commentary The European Central Bank (ECB) announced a tapering of the repurchase program on Sept. 9. One would imagine that this is a sensible idea given the recent rise in inflation in the eurozone to the highest level in a decade and the allegedly strong recovery of the economy. However, there’s a big problem. The announcement is not really tapering, but simply adjusting to a lower net supply of bonds from sovereign issuers. In fact, considering the pace announced by the central bank, the ECB will continue to purchase 100 percent of all net issuances from sovereigns. There are several problems in this strategy. The first one is that the ECB is unwillingly acknowledging that there’s no real secondary market demand for eurozone countries’ sovereign debt at these yields. One would have to think of twice or three times the current yield for investors to accept many eurozone bonds if …
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