ECB ups bond-buying yet yields still rising

Julian Harris
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YIELDS on Italian debt continued their upward surge yesterday, despite the European Central Bank (ECB) appearing to have boosted its bond purchase programme in a bid to control debt costs in struggling peripheral states.

Yields on 10-year Italian debt reached a 14-year high of 6.67 per cent yesterday, with analysts again warning that the government’s finances could be rendered untenable if the figure rises above seven per cent. Meanwhile, Italian five-year credit default swaps (CDS) increased by 2.15 per cent to 503.255.

The ECB has splashed a jaw-dropping €183bn since it began its bond-buying programme last year. It revealed yesterday that it bought €9.52bn in bonds last week – the most the bank has spent since mid-September.

The jump in outlays comes days after Mario Draghi (right) took over from Jean-Claude Trichet as the ECB’s new president, and as the bank continues to publicly resist pressure from – among others -- the US, Britain and Russia, to step up the purchases.

In his first news conference as ECB president last week, Draghi offered no commitment to scaling up the bank’s bond-buying, describing it as a “limited” programme.