The euro and Euro-area sovereign bonds dropped but were not exactly going into freefall after the German constitutional court gave a mixed ruling on the ECB’s bond buying programme. Judges said the asset purchase programme partially violated the German constitution, but on a key point it did not say the ECB’s actions constituted monetary financing. And it said the ruling has no bearing on the Pandemic Emergency Purchase Programme for the Covid-19 response. Relating to long-standing Public Sector Purchase Programme going back some years under Mario Draghi, the court said the ECB needs to show that the scheme is ‘not disproportionate to the economic and fiscal policy effects.
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