Bond yields across Europe continued to slide Thursday as weak inflation data and hints from the Vice President of the European Central Bank (ECB) boosted hopes of a full-blown sovereign bond-buying program.
Bonds from countries on the so-called periphery of the euro zone performed particularly well, with yields on benchmark 10-year bonds from Ireland, Italy and Portugal hitting 10-year lows. France and Germany’s bond yields also slipped.
It comes after ECB Vice President, Vitor Constancio, raised hopes of full-blown quantitative easing – also known as QE – on Wednesday.
He said the central bank expected its balance sheet to rise to 2012 levels on the back of measures already agreed, but added the purchase of sovereign debt and “other assets” could be an option if the environment didn’t develop as expected.