Bond Markets Have a Trillion Reasons to Brace for Super Thursday

(Bloomberg) -- After a record-breaking week with a market milestone reading one trillion euros, European investors are getting ready for a busy Thursday that could feature the same number.

That’s when the European Central Bank will dish out cheap loans to banks, with take-up expected to reach the eye-catching amount. The ECB sweetened terms of its so-called TLTROs in April, in an effort to boost lending and further ease stress in Europe’s money markets.

Such take-up would come soon after last Tuesday’s bond bonanza, when almost 32 billion euros ($36 billion) of sovereign debt was sold. It took Europe’s primary market issuance to over one trillion euros this year -- a milestone passed 12 weeks faster than in 2019 -- as governments rushed to fund their ever-increasing stimulus packages in an effort to avert the threat of economic depression from the coronavirus.

Two other major monetary policy institutions also have Thursday announcements.

The Bank of England is expected to announce an increase of 200 billion pounds to its bond-buying stimulus, taking it to 845 billion pounds, according to Citigroup Inc, given the BOE’s current round of ammunition will run out in July at the current pace of buying. Further out, the bank also sees policy makers easing rates to zero in November, with tentative cuts to sub-zero territory possible next year.

The Swiss National Bank looks likely to buck the trend for largess by refraining from extending stimulus and keeping rates on hold.

Political developments are also in prospect, with the European Union’s leaders meeting to discuss a 750-billion-euro recovery fund, in what could prove to be another landmark moment for the bloc’s response to the crisis.

Also Next Week:

Euro-area bond sales are scheduled from Germany, which will sell a new 10-year note, as well as France and Spain, and are set to total around 21 billion euros for the week, according to Commerzbank AG.

Portugal may sell debt through banks as it will pay bond redemptions of 8 billion euros. Italy will also pay almost 16 billion euros of redemptions and make small coupon payments.

The U.K. will hold four regular gilt auctions for a combined 11 billion pounds and buy back bonds at a steady rate of 1.5 billion pounds per operation.

• Data for the coming week in the euro area and Germany is mostly relegated to second-tier, backward-looking figures, with the exception of German ZEW survey figures for June
  • The U.K. data slate picks up with May inflation, retail sales and government borrowing numbers garnering most of the attention aside from the BOE announcement
• Igazio Visco on Tuesday is the sole ECB speaker scheduled next week; ECB publishes its economic bulletin Thursday
  • BOE Governor Andrew Bailey will not hold a press conference after Thursday’s interest-rate decision and there are no further policy makers scheduled to speak
• There are no major sovereign rating reviews next Friday

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