In January, the ECB bought €53bn under the PEPP and €17.9bn under the APP.
The ECB's balance sheet is now equivalent to 61% of euro area GDP compared to 39% at the start of 2020.
Pandemic bond-buying program was raised by €500bn euros to a total of €1,850 billion and extended by nine months to at least the end of March 2022.
The ECB already used up around €810bn or 43% of its €1.85tn PEPP envelope.
The pace of PEPP purchases in January was stable compared to the last 3 months and remained around € 50/60 billion.
The ECB also published the bi-monthly detailed split for PEPP(Dec.2020-Jan.2021 at this release).
Since the implementation of the PEPP, 95% of this envelope outstanding is in public sector securities
Supranationals accounted for over 10% of public sector purchases for the first time since the programme's inception
Germany, France, Italy and Spain all saw very slight upside deviations from the capital key over the Dec-Jan period
In January 2021, ECB net asset purchases under APP declined to €17.9bn versus €21bn in December.
In January 2021, APP by programme: PSPP (€13.7bn; 76.1% of total), CSPP (€4.9bn; 27.5%), CBPP3 (€0.1bn; 0.4%) and ABSPP (€-0.7bn; -4%).
In January 2021, deviation of PSPP purchases from capital key proportions was in favor of France and Italy against Germany.
APP redemptions in January 2021 will total €25.5bn, of which €15bn will be PSPP redemptions. Between January 2021 and January 2022, total APP redemptions will be €255bn, of which €196bn will be PSPP redemptions
ECB QE program is currently projected to extend into march 2022, but pandemic trends and post-covid economic fragmentation in the Eurozone are likely to make ECB support still needed, also in order to make the NGEU more effective. Our two main concerns:
Tightening in bank credit conditions once government debt guarantees will come to an end.
The hawks could challenge the stance of the ECB monetary policy.
Technical factors will continue to play a major in the euro fixed income market in 2021.
ECB firepower over the next 14 months is huge : €1100bn (PEPP) + €20bn/month (APP) or €93bn/month
ECB’s PEPP would ensure that net issuance is negative for all EGBs. As of end of 2021, % of German public securities held by the Eurosystem could rise above 40%.
The ECB will purchase €8-10bn of corporate debt per month. As of the end 2021, the Eurosystem will held 35%-40% of the eligible of corporate debt.