U.S. and European stock markets moved higher Tuesday morning on a Reuters report, quoting anonymous sources, suggesting the European Central Bank may buy corporate bonds in the secondary market in an effort to fight deflation. The ECB has subsequently confirmed to CNBC that “the ECB has taken no such decision.”
But it’s clear from the investors’ response they think there should be a “YET” at the end of that sentence.
If the report proves true it will be a new front in the ECB’s fight against deflation. Prior to this, the ECB said it would buy ABS, or asset-backed securities, under certain circumstances, in the primary market. In other words, upon issuance by banks, provided they meet a set of guidelines in terms of quality and risk.
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