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What has occurred since yesterday ?
Yesterday the German Constitutional Court has ruled that the Asset Purchase Program of the European Central Bank partly violates the German constitution. Via that program bonds of more than two trillion Euros were purchased since 2015 to bring liquidity to the markets and the economy. As the German constitutional court cannot directly rule about the ECB, as the German constitution does not apply to it, it took it up with the German authorities. The German government and the German parliament (Bundestag) had to work towards the goal to ensure that the ECB reviews the proportionality of its asset purchase programs
The risk spreads of Italian government bonds reacted accordingly and increased modestly. It is important to note that the German constitutional court did not judge the asset purchases as concealed government financing, but only ruled on the proportionality of the measures.
In the equity markets the optimism about the loosening measures and higher crude oil prices lead to higher prices. The European markets closed partly in positive territory of more than 2%. Also in the USA the equity index S&P 500 gained 0,9%. Yields of investment grade government bonds remained mostly unchanged.
Legal note:
Prognoses are no reliable indicator for future performance.