Comments from an unnamed official at the European Central Bank (ECB) caused global bond yields to rise today, including U.S. MBS. The official said that a “consensus was being formed to gradually taper the ECB’s bond buying program when they decide that it’s time to conclude it. The plan would be similar to what the U.S. Fed did to end its bond buying program. The ECB’s program is currently set to expire in March 2017. At the last meeting in September, some investors were disappointed that the ECB did not announce an extension to the program. According to the ECB, the decision about when to end the program will depend on the performance of the economy. The next ECB meeting will take place on October 20. The added demand for bonds from central banks around the world has helped push down yields. Today’s comments caused investors to reduce their expectations for additional stimulus from the ECB, which was negative for both stocks and bonds.
Wednesday October 5, 2016