Important decisions looming this week for ECB QE
From Barclays research:
The European Court of Justice (ECJ) opinion will have crucial implications for government bond purchases by the ECB and the outlook for the euro. On Wednesday, the Advocate General of the ECJ will publish his opinions on a list of questions raised by the German Constitutional Court (GCC) regarding the Outright Monetary Transactions (OMT) launched in September 2012. The ECJ ruling, which often follows the views of its Advocate General, could have adverse impacts on the effectiveness and the design of broad-based ECB government bond purchases. In particular, the imposition of seniority for the ECB on its holdings of EGBs would in our view materially undermine the impact of the QE as it squeezes private creditors out. Negative impacts may also come from other aspects, such as quantitative limits for government bond purchases.