Confirmed: ECB Stopping Controversial Buying of Bonds

The ECB has just announced that it bought only about 1B euros worth of bonds last week.

"The slowdown comes after spending 4 billion euros ($6 billion) for three weeks running and adds further weight to some economists' views that the ECB will keep the buying to a minimum.ECB President Jean-Claude Trichet pointed to slowdown as a possible trend last week, while ECB heavyweight Juergen Stark said on Friday that the programme could be brought to a close if bond markets continued to improve."My hunch is that if there is a sense that the market is returning to some kind of normality then they could remove the support and see how the market reacts," said Deutsche Bank economist Gilles Moec". (Reuters)

The ECB had started buying bonds in May 2010 as a response to the Greek debt crisis which was threatening to lock higher-debt euro zone members out of borrowing markets.

"Considering buying government bonds was so contentious within the Governing Council I wouldn't be surprised if they tried to stop as soon as possible, although they would have to leave the door open to return to it."

As a result, the euro rose roughly two ticks against the dollar after the purchased amount was announced. German bond yields, which move inversely to prices, were lower across the curve by 1600 GMT with the two-year Schatz yield falling the most.