Significance
The unprecedented volume of ECB bond purchases, and the liquidity of the secondary debt market, have supported economies through the COVID-19 pandemic. Concerns persist that investor sentiment could reverse, raising bond yields, or that stuttering recoveries could increase fiscal risks.
Impacts
Investors and policymakers will monitor bond yields, which remain ultra-low but are edging up; higher yields could spark policy easing.
Higher rates would most restrict the borrowing of the most highly indebted governments -- Greece, Italy, Portugal, Spain and France.
Even the budgets of less indebted members, Germany, the Netherlands and Austria, will worsen as they are now being hit hard by COVID-19.