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CBPP3 growth eases ahead of Eurosystem holiday pause

CBPP3 buying continued to ease last week, with gross purchases coming in at €613m, the lowest level since the summer, reflecting a lack of new eligible issues as the primary market edges towards closing for the imminent holiday season.

According to data released by the European Central Bank relating to settled and outstanding purchases under its programmes on Monday, the CBPP3 portfolio grew €613m in the week to last Friday, €177m more than a €436m increase the previous week. Given there were no redemptions last week – for the first time since the week ending 4 September – gross purchases were also €613m, €123m lower than €736m the previous week.

Last week’s gross purchases are the lowest since the week ending 28 August, towards the end of the summer holidays.

“As expected, compared with the previous months, the purchasing activities of the central bank thus decreased in December,” said DZ Bank analyst Wolfgang Grill.

No CBPP3-eligible supply settled last week, for the second consecutive week, and ING analysts said the slowdown in purchases – gross purchases have dropped well below €1bn for the past two weeks – is unsurprising given the lack of new issues for the Eurosystem to participate in.

“Much in line with previous years,” they said, “there has been a slowdown coming towards Christmas, with the coming week the last trading week for the ECB until the new year.”

The ECB has said that it will again pause APP and PEPP purchases in anticipation of significantly lower market liquidity towards the end of the year. The last trading day of the year will be this Friday, and purchases under both programmes will resume in the week commencing 4 January.

Aggregate gross APP and PEPP purchases of €33.701bn last week were €262m lower than the €33.963bn of the previous week, but around the €33bn level the Eurosystem has maintained since the beginning of November.