EUR: Assessing implications of EU joint debt issuance

EUR: Assessing implications of EU joint debt issuance The euro received negligible help yesterday from the (unconfirmed) news that German Chancellor Olaf Scholz has ultimately given support to a joint issuance of EU debt to fund measures against the energy crisis, with the condition that funds are distributed as loans and not grants. The market impact should be quite straightforward: positive for peripheral spreads (Italian bonds rallied yesterday), negative for EZ core rates, and potentially fuelling speculation of more ECB tightening if the Bank views these measures as inflationary. For the euro, the net impact may well be neutral in the near term, potentially positive in the longer run.
Today, the eurozone’s calendar is quite light, but some interest will be on speeches
by ECB’s Chief Economist Philip Lane and Governing Council Member Francois
Villeroy.

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