Capital

Central bank asset purchases and auction cycles revisited: new evidence from the euro area

Retrieved on: 
Friday, April 19, 2024

Working Paper Series

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    • Working Paper Series
      Federico Maria Ferrara

      Central bank asset purchases
      and auction cycles revisited:
      new evidence from the euro area

      No 2927

      Disclaimer: This paper should not be reported as representing the views of the European Central Bank
      (ECB).

    • Abstract
      This study provides new evidence on the relationship between unconventional monetary
      policy and auction cycles in the euro area.
    • The findings indicate that Eurosystem?s asset purchase flows mitigate
      yield cycles during auction periods and counteract the amplification impact of market volatility.
    • The dampening effect of central bank asset purchases on auction cycles is more sizeable and
      precisely estimated for purchases of securities with medium-term maturities and in jurisdictions
      with relatively lower credit ratings.
    • On the other hand, central banks may influence price dynamics in these markets, most notably
      through their asset purchase programmes.
    • If so, do central bank asset purchases
      affect bond yield movements around auction dates?
    • Auction cycles are present when secondary market yields rise in
      anticipation of a debt auction and fall thereafter, generating an inverted V-shaped pattern around auction
      dates.
    • ECB Working Paper Series No 2927

      3

      1

      Introduction

      The impact of central bank asset purchases on government bond markets is a focal point of economic and
      financial research.

    • If so,
      do central bank asset purchases shape yield sensitivity around auction dates?
    • The paper provides new evidence on the effects of Eurosystem?s asset purchases on secondary market
      yields around public debt auction dates.
    • The analysis builds on previous research based on aggregate data
      on central bank asset purchases and a shorter analysis period (van Spronsen and Beetsma 2022).
    • Using
      granular data on Eurosystem?s asset purchases offers an opportunity to shed light on the mechanisms linking
      unconventional monetary policy and auction cycles.
    • Given this legal constraint, the study
      hypothesises that the effect of asset purchases on 10-year auction cycles is mostly indirect, and goes via price
      spillovers generated by purchases of securities outside the 10-year maturity space.
    • Taken together, these results provide new evidence about auction cycles in Europe and contribute to a
      larger literature on the flow effects of central bank asset purchases on bond markets.
    • Section 4 offers descriptive evidence about auction cycles in the euro area.
    • Auction cycles are defined by the presence of an inverted V-shaped pattern in secondary market yields
      around primary auctions.
    • That is, government bond yields rise in the run-up to the date of the auction and
      fall back to their original level after the auction.
    • Their limited risk-bearing capacities and inventory management operations are
      seen as key mechanisms driving auction cycles (Beetsma et al.
    • ECB Working Paper Series No 2927

      7

      Second, central bank asset purchases can alleviate the cycle by (partly) absorbing the additional supply
      of substitutable instruments in the secondary market (van Spronsen and Beetsma 2022).

    • This expectation is
      supported by several analyses on the price effects of central bank bond purchases (D?Amico and King 2013;
      Arrata and Nguyen 2017; De Santis and Holm-Hadulla 2020).
    • Empirically, previous research has provided evidence of auction cycles taking place across different jurisdictions.
    • (2016) detect auction cycles for government debt in Italy, but not in Germany, during the European
      sovereign debt crisis.
    • Research on the impact of central bank asset purchases on yield cycles around auctions is still limited.
    • Their paper provides evidence
      that Eurosystem?s asset purchases reduce the presence of auction cycles for euro area government debt.
    • Nonetheless, several questions remain open about auction cycles and unconventional monetary policy
      in the euro area.
    • Therefore, they
      provide only a partial picture of auction cycles and central bank asset purchases in Europe.
    • The use of granular data on central bank asset purchases is especially important in light of the modalities
      of monetary policy implementation of the Eurosystem.
    • Altogether, these elements motivate further investigation of the relationship between central bank asset
      purchases and auction cycles in the euro area.
    • Taken together, these results confirm that Eurosystem?s asset purchases mitigate yield cycles during auction periods and counteract the amplification impact of market volatility.
    • The findings confirm that the flow
      effects of central bank purchases on yield movements around auction dates are driven by lower-rated countries.
    • Additional analyses provide evidence for an indirect effect of purchases on auction cycles and highlight
      the presence of substantial heterogeneity across jurisdictions and purchase programmes.
    • Flow Effects of Central Bank Asset Purchases on Sovereign Bond
      Prices: Evidence from a Natural Experiment.
    • Federico Maria Ferrara
      European Central Bank, Frankfurt am Main, Germany; email: [email protected]

      ? European Central Bank, 2024
      Postal address 60640 Frankfurt am Main, Germany
      Telephone
      +49 69 1344 0
      Website
      www.ecb.europa.eu
      All rights reserved.

Monetary asmmetries without (and with) price stickiness

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Friday, April 19, 2024
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    Sunrise Wind receives federal record of decision, takes final investment decision

    Retrieved on: 
    Wednesday, April 10, 2024

    Sunrise Wind receives federal record of decision, takes final investment decision

    Key Points: 
    • Sunrise Wind receives federal record of decision, takes final investment decision
      Sunrise Wind today received its Record of Decision (RoD) from the US Department of the Interior's Bureau of Ocean Energy Management (BOEM), crossing a critical milestone in the federal environmental review process for the offshore wind project serving New York.
    • Additionally, Ørsted and Eversource today announced they have jointly taken a final investment decision on Sunrise Wind, solidifying the commitment to build the project, and will now advance with some important onshore construction activities.
    • Sunrise Wind will bring USD 700 million of investment to Suffolk County and create 800 direct jobs and thousands of indirect jobs in the state.
    • With the federal Record of Decision in hand and our final investment decision having been made, we can continue to create hundreds of local union jobs and stand up a vibrant supply chain.

    EQS-News: Fiscal year 2023: Profitability and cash flow exceeded expectations

    Retrieved on: 
    Wednesday, April 10, 2024

    Vitesco Technologies, a leading international provider of modern drive technologies and electrification solutions for sustainable mobility, is today publishing its consolidated financial statements for fiscal year 2023.

    Key Points: 
    • Vitesco Technologies, a leading international provider of modern drive technologies and electrification solutions for sustainable mobility, is today publishing its consolidated financial statements for fiscal year 2023.
    • Thanks to improved profitability and despite higher investments and the financial burden from the contract manufacturing business with Continental, free cash flow amounted to €84.9 million in fiscal year 2023 (2022: €123.2 million).
    • CFO Sabine Nitzsche: “We fully achieved – and in some cases exceeded – our published guidance for all of the main financial KPIs.
    • The company is also forecasting a negative free cash flow of around €350 million in 2024, owing mainly to negative effects from reduced contract manufacturing activities and the repayment of start-up financing to Continental.

    True Global Ventures Announces Appointment of Beatrice Lion as CEO

    Retrieved on: 
    Thursday, March 28, 2024

    Singapore, Singapore--(Newsfile Corp. - March 28, 2024) - True Global Ventures is proud to announce the appointment of Beatrice Lion, 28, as the new Chief Executive Officer of its Fund manager in Singapore.

    Key Points: 
    • Singapore, Singapore--(Newsfile Corp. - March 28, 2024) - True Global Ventures is proud to announce the appointment of Beatrice Lion, 28, as the new Chief Executive Officer of its Fund manager in Singapore.
    • Her dedication to the firm as a General Partner has resulted into being board member/observer on 4 of True Global Ventures portfolio companies.
    • Beatrice's association with True Global Ventures began in 2017, when she joined Innovator Founders Capital (IFC) 1,2,3 formerly known as True Global Ventures 1,2,3.
    • Beatrice Lion commented, "I am thrilled to step into the role of CEO of True Global Ventures Fund manager.

    STOCKHOLDER ALERT: The M&A Class Action Firm Continues Investigating the Merger – DOMA, LABP, FUSN, CBNK

    Retrieved on: 
    Tuesday, April 9, 2024

    NEW YORK, April 09, 2024 (GLOBE NEWSWIRE) -- Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report.

    Key Points: 
    • NEW YORK, April 09, 2024 (GLOBE NEWSWIRE) -- Monteverde & Associates PC (the “M&A Class Action Firm”), has recovered money for shareholders and is recognized as a Top 50 Firm in the 2018-2022 ISS Securities Class Action Services Report.
    • Under the terms of the agreement, DOMA shareholders are expected to receive $6.29 in cash per share they own.
    • Capital Bancorp, Inc. (Nasdaq: CBNK ), relating to its proposed merger with Integrated Financial Holdings, Inc.
    • Under the terms of the agreement, CBNK shareholders are estimated to receive $5.36 in cash and 1.115 shares of Capital common stock per share they own.

    Global Tech Industries Group, Inc. welcomes Mr. Luke Rahbari as the Company’s new Chief Operating Officer

    Retrieved on: 
    Tuesday, April 9, 2024

    Mr. Rahbari began his capital markets career in 1993 as a derivatives trader and equity options specialist on the CBOE.

    Key Points: 
    • Mr. Rahbari began his capital markets career in 1993 as a derivatives trader and equity options specialist on the CBOE.
    • In 2002, Mr. Rahbari was part of the management team involved in the sale of the firm to TD Bank.
    • Mr. Rahbari then ran derivatives books in New York, London, and Chicago for the bank.
    • Mr. Rahbari has extensive experience in the trading and capital markets and has been active in several private, non-public firms as well.

    Peapack Private Announces New York City Expansion

    Retrieved on: 
    Monday, April 8, 2024

    Andrew, fresh off his long tenure from Signature Bank and its successor Flagstar Bank, is now the President of the Commercial Bank in New York for Peapack Private.

    Key Points: 
    • Andrew, fresh off his long tenure from Signature Bank and its successor Flagstar Bank, is now the President of the Commercial Bank in New York for Peapack Private.
    • “We are continuing to move aggressively into New York City due to the market disruption that occurred last spring,” said Doug Kennedy, President and Chief Executive Officer of Peapack-Gladstone Bank.
    • “We were attracted to the single-point-of-contact model that Peapack Private offers, along with the added value of its wealth management solutions,” commented Corrado.
    • Peapack Private fully expects to continue offering its private banking service model to the Tri-State area and to grow in the coming years.

    Auto Parts 4 Less Group Inc. Announces Significant Debt Standstill Agreements

    Retrieved on: 
    Monday, April 8, 2024

    LAS VEGAS, April 08, 2024 (GLOBE NEWSWIRE) -- Auto Parts 4 Less Group Inc. (OTC: FLES) ("AutoParts4Less," "the Company"), a technology-driven e-commerce leader in the automotive parts sector, announces significant debt standstill agreements.

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    • LAS VEGAS, April 08, 2024 (GLOBE NEWSWIRE) -- Auto Parts 4 Less Group Inc. (OTC: FLES) ("AutoParts4Less," "the Company"), a technology-driven e-commerce leader in the automotive parts sector, announces significant debt standstill agreements.
    • AutoParts4Less is excited to announce a pivotal advancement in its financial strategy, having secured comprehensive standstill agreements with key note holders.
    • This strategic financial restructuring initiative has effectively secured the lock-up of all convertible debt, totaling approximately $15 million, into preferred share structures, common stock with a two-year lock-up, or standstill agreements.
    • Christopher Davenport, CEO of Auto Parts 4 Less Group Inc., stated, "We are proud to announce the successful negotiation of standstill agreements.