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ECB plunged into the corporate bond market

Wednesday, Jun 08 2016
There were no data releases from Eurozone today. The European Central Bank entered new territory in its efforts to stimulate the euro region’s flagging economy, plunging into the corporate bond market on Wednesday and buying the debt of some of the continent’s biggest companies. Investors are watching for an indication of whether they were right to pile into investment-grade corporate bonds on the promise of ECB President Mario Draghi’s purchases. 
Investors have previously been disappointed by other parts of the ECB’s bond-buying program. Securitized debt surged to the highest in more than seven years when the central bank announced plans to start buying asset-backed securities in 2014. They soon declined when purchases failed to meet expectations. Since the central bank started buying the notes in November 2014, it has accumulated just 19 billion euros of them. “So much depends on the sizes of the purchases, which the ECB has been vague about on purpose,” said Juan Esteban Valencia, a credit strategist at Societe Generale SA in Paris. “They might still be figuring out their approach.”
 
Euro is currently being traded few points below 1.1390 level. Pair is likely to find support around 1.13 handle and resistance above 1.1430 level. There will be no major data releases later today.
 
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