- The ECB appears to consider setting limits on sovereign yields by pledging unlimited bond purchases.
- German politicians warn Greece to stay on the reform path and not to expect a third rescue package.
- Chinese new house prices rose in 49 out of 70 cities in July, the highest share in 14 months.
The positive sentiment continued in Friday’s US session after Spanish 10-year government bond yields fell to a six-week low. This morning has been more downbeat. Germany’s Spiegel magazine wrote that the ECB is considering setting limits on yields of euro area sovereign debt by pledging unlimited bond purchases and said that the policy will be decided at the September Governing Council meeting. Such a promise could be an important step towards regaining investor confidence but the question is whether it can be seen as compatible with the EU Treaty’s prohibition of monetary financing of government debt. According to the Wall Street Journal the Spanish Finance Minister said that the Spanish government would like to see ECB commit to substantial open-ended
sovereign debt purchases before it asks for help.
During the weekend several German politicians warned Greece to stay on the reform path and argued against a third rescue package. German Finance Minister Schäuble said on Saturday that “it is not responsible to throw money down a bottomless pit."
In China, new house prices rose in 49 out of 70 cities in July, the highest share in 14 months, indicating that interest rate cuts and incentives for first-time buyers have had a positive effect.
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