ECB Plan Said to Pledge Unlimited, Sterilized Bond-Buying!

• ECB Plan Said to Pledge Unlimited, Sterilized Bond-Buying! 
  by Jana Randow and Jeff Black, http://www.bloomberg.com/ 
  European Central Bank President Mario Draghi’s bond-buying proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said.
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  Under the blueprint, which may be called “Monetary Outright Transactions,” the ECB would refrain from setting a public cap on yields, according to the people, and a third official, who spoke on condition of anonymity. The plan will only focus on government bonds rather than a broader range of assets and will target short-dated maturities of up to about three years, two of the people said.
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  The euro jumped half a cent on the report and traded at $1.2611 at 5:40 p.m. in Frankfurt. European stocks advanced. An ECB spokesman referred to an Aug. 20 statement in which the Frankfurt-based central bank said it was misleading to report on decisions that haven’t been taken yet.
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  Draghi told the European Parliament this week that the ECB needs to intervene in bond markets to wrest back control of interest rates in the fragmented euro-area economy and ensure the survival of the common currency. Policy makers are deliberating on the plan today and Draghi will announce whether it has been agreed to at a press conference tomorrow.
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  ‘Powerful Signal’
  “For the moment, the focus really is on the word ‘unlimited,’ which, if indeed affirmed by Draghi at tomorrow’s meeting, would constitute a new step in the ECB’s rhetoric,” said Thomas Costerg, an economist at Standard Chartered Bank in London. That would “send a powerful signal to the market.” The report on Draghi’s bond plan prompted currency, equity and bond markets to rally.
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  Spanish 10-year bonds advanced for a third day, with yields dropping 16 basis points to 6.41 percent. Similar Italian yields lost 14 basis points. U.S. Treasury yields rose from almost one- month lows, Turkey’s lira gained and the pound climbed.
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