On Thursday 4th August Mark Carney delivered a four-pronged package of monetary stimulus to keep the global liquidity party going, after some disappointment from the Bank of Japan last week. Lower for longer remains the message and as long as it lasts then excessive credit growth in emerging markets may well continue to go unpunished.
Until the European Central Bank (ECB) changes the rules associated with sovereign bond purchases, the duration of its holdings will steadily increase. This introduces a self-reinforcing dynamic. When yields drop, the ECB is forced to buy more, putting further downward pressure on yields.