Ahead of a highly awaited central bankers' summit in Jackson Hole, Wyoming at the end of this week and ECB's monetary policy meeting on September 6, Germany held a debt sale on Monday, during which the country managed to sell 1.97 billion euros worth of 1-year bonds, below the 3 billion euro target.
The bonds were sold an average yield of -0.0246%, in comparison with -0,0540% seen at the previous auction. It means that investors are ready to lose some money in exchange for the possibility of holding safe-haven German securities, amid renewed Eurozone crisis worries.
On Tuesday Spain will hold a 3- and 6-month debt auction.
Merkel supporting Samaras
German Chancellor Angela Merkel, who continues to strongly advocate for a Eurozone with Greece remaining as a member, warned to coalition peers over the weekend to “weigh their words” with regards to a possible depart from Greece.
Merkel was quoted on an ARD television as saying that any remarks on Grexit were damaging, as the crisis reaches a “decisive phase.” The comments follow the plea by a leader of her Bavarian Christian Social Union governing partner, who called for Greece to detach itself from the Euro area.
Alexander Dobrindt, the CSU’s general secretary, told today’s Bild newspaper, that Greece is expected not to be a part of the 17-nation euro area next year.
Bundesbank chief says ECB bond buying "like a drug"
The head of Germany's Bundesbank Jens Weidmann showed his opposition once again to any resumption of the ECB bond buying program as rumours pile up the central bank may be gearing up to draw a line in the sand in Euro periphery bond yields.
Jens Weidmann was quoted on the weekly Der Spiegel. "Such a policy is for me close to state financing via the printing press," Weidmann told the weekly magazine. "In democracies, it is parliaments and not central banks that should decide on such a comprehensive pooling of risks."
"We should not underestimate the risk that central bank financing can become addictive like a drug," Weidmann said. "I hardly believe that I am the only one to get stomach ache over this," he said.
From Reuters, who quotes Merkel in her interview with German ARD: "I think it is good that Jens Weidmann warns the politicians again and again," Merkel said. "I support Jens Weidmann, and believe it is a good thing that he, as the head of the German Bundesbank, has much influence in the ECB."
Merkel wants Greece to stay in Eurozone, provided bailout requirements are met
During a press conference held in Berlin after Chancellor Angela Merkel's meeting with Greek PM Antonis Samaras, the German leader expressed her desire for Greece to stay in the Eurozone, on the condition that it carries out all the necessary reforms.
Angela Merkel said that the meeting with Antonis Samaras just strengthened her conviction that the Greek government is doing its utmost to meet Troika's requirements. She also assured that Germany will refrain from making any "premature judgments".
Antonis Samaras reiterated his earlier plea for more time for austerity saying that “we are not asking for more money, we are looking for growth,” but Angela Merkel just repeated that Greece must meet its bailout commitments.
According to Chuck Butler, President of EverBank World Markets: “The German Chancellor has to walk a tight rope, like the one Leon Russell sings about, for she's got to appear tough for the German people, but work with Greece to keep them in the Eurozone. And Greece wants time and money. I don't think the German Chancellor has the time to give to Greece, without ticking off her citizens.”