Sep 6, 2012

Bond bonanza in eurozone to support ‘weakies’

The failure of Germany's bond auction overnight suggests markets are waiting for the ECB to begin a massive bond buying program tomorrow, writes Stephen Koukoulas of Business Spectator.

It is an understatement to say that financial markets are anxiously awaiting the details of the European Central Bank’s policy decision tomorrow. That decision is likely to boil down to a confirmation of the ECB’s intention to buy government bonds of the so-called “weak” members of the eurozone.

Ahead of the announcement, there have been the inevitable snippets of information and well-informed reports that suggest European Central Bank president Mario Draghi will deliver a workable policy proposal. The market is ready to embrace bond purchases by the ECB, which is an important part of Draghi’s “we’ll do whatever it takes” attitude to hold the eurozone together.

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