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Net issuance of Eurozone govies after ECB purchases is extremely negative

During the 12 months to July 2016, Eurozone countries issued €157 bn. Net issuance has been stagnating for the last two years. But in the same time, the Eurosystem is purchasing very large amounts of govies. The net issuance of Eurozone govies is now extremely negative, at – 599 bn over the last twelve months. This has a powerful impact on Eurozone fixed-income markets and may explain around 50 bps of decline of the German 10y. yield. As long as the ECB’s QE will continue, the downward pressure on yields will remain heavy.

Graph_Net-issuance-of-euro-govies
Bastien DRUT, Strategy and Economic Research at Amundi
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Net issuance of Eurozone govies after ECB purchases is extremely negative
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