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Snap AV: Don’t fear the (ECB) taper

Summary:
A trio of reasons to stay calm from HSBC’s Chris Attfield after Draghi’s Sintra speech — you know the one that some analysts suggest heralds “a co-ordinated shift by developed world central banks in a more hawkish direction”.From AttfieldECB President Mario Draghi’s speech at Sintra shook the market out of complacency about the future of QE, causing yields to spike higher. But are we right to fear the taper? We give three reasons why a further reduction of QE could be less disruptive for the non-core than some investors assume, focussing on Spain and Italy.First, reinvestment flows will increase even as we expect PSPP buying to decrease. The Eurosystem may be at the maximum 33% limit for Spanish and Italian bonds maturing in the next two years, meaning that under this “max” scenario the

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A trio of reasons to stay calm from HSBC’s Chris Attfield after

David Keohane
(Spending some time as FTAV’s Bombay wallah. Noticeably sweatier but not much else has changed.) David studied economics, politics and journalism before joining the FT in 2011 as a Marjorie Deane fellow. He covered emerging markets, equities and currencies before making the jump over to FT Alphaville in May 2012. In between his degree and masters he wandered into the real world of business where he learnt how to manipulate a spreadsheet and organise meetings where nothing gets decided.

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