The ECB’s CSPP is an aggressive program designed to broadly lower debt costs for companies in the European Union. By that measure the program has already been successful, with the yield for AA-rated non-financial corporations falling from 1.6% prior to the announcement of the program to less than 1% today. While the recent announcement of additional details brought the program back into the news, further upside for European corporate bonds may be limited. However, by pushing European yields lower, the CSPP would also continue to put downward pressure on U.S. yields, should the program push more foreign money toward the relatively higher yields of U.S. bond markets.
Anthony Valeri is investment strategist for LPL Financial.