When Mario Draghi buys, it's time to sell

President of the European Central Bank (ECB) Mario Draghi (L) speaks with Governor of the Bank of England Mark Carney at the start of the International Monetary and Financial Committee (IMFC) Meeting during the 2016 World Bank-IMF Spring Meeting in Washington April 16, 2016. REUTERS/

In November 2014 covered bond prices fell sharply after the ECB started its purchases of the secured debt, as investors grew sick of expensive prices. More painful still was the so-called 

Bundshock in mid-2015, when markets front-ran the ECB's purchases, only to see Bund yields jump 40 basis points in four days, inflicting severe losses. The more extreme monetary policy gets, the more wary investors are likely to be.

Context

The governing council of the European Central Bank will meet on April 21.

The ECB said on March 10 it would add corporate bonds to its monthly purchase programme, and would begin buying towards the end of the second quarter of 2016. 

Citigroup analysts expect the ECB to buy 3-5 billion euros of corporate bonds a month. - Reuters