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ECB: “fundamental flexibility for peripheral Europe bond yields”

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ECB: “fundamental flexibility for peripheral Europe bond yields”
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“Today’s extraordinary meeting, focused on the risk of economic and financial fragmentation of the Eurozone, partially disappointed the markets, already discouraged by the vagueness of last week’s meeting. However, in the absence of substantial indications on the new instrument to which the Central Bank is working, the single currency has completely lost the gains of the morning. The positive note is that, however, there could be an additional instrument in addition to the reinvestment of the PEPP, which was not deemed sufficient to moderate the rise in spreads “. So Michele Morra, portfolio manager of Moneyfarm, after the press release of the ECB at the end of today’s emergency meeting.

In this sense, the capacity of additional instruments to mitigate the effect of the rate hike on the financial stability of peripheral Europe also remains to be demonstrated. “However, we believe that the flexibility that the ECB aspires to is a fundamental aspect for bond yields in peripheral Europe, not only thanks to the direct containment of spreads deriving from the purchase of securities, but also due to the Central Bank’s commitment to intervening in stressful situations “, explains the expert, explaining that” concentrating one’s investments in some countries by systematically focusing on the protection of the Central Bank represents a risk and we therefore believe it is important to continue to diversify the bond component of the portfolio “.

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