Man GLG and Legg Mason Brandywine react to ECB's quantitative easing announcement

Jon Mawby, Portfolio Manager at GLG and co-manager of the £1bn GLG Strategic Bond Fund, said:
“Market participants have taken the ECB’s €60bn per month programme positively given that there is partial loss-sharing  and that more importantly it will continue until it sees a “sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2 per cent.”
This means the program is potentially open ended in nature and given that asset purchases have been guided in the 2-30 year maturity spectrum, it should be supportive of peripheral government yields in the medium term.  However for the recovery to be sustained we will need to see continued structural reforms.  In the short term there remains a key tail risk from the Greek elections over the weekend, particularly in light of the ECB’s inability to buy Greek debt until the SMP rolls off in July.”
 
Regina Borromeo, Portfolio Manager at Legg Mason subsidiary Brandywine Global and co-manager of the £145m Legg Mason Income Optimiser Fund, said:
“We have been expecting the ECB to announce an expanded asset purchase program since the current programs (Target LTRO/Covered bond purchases and the ABS programs) have not been large enough. These latest measures should help the ECB move towards its goal of price stability.
“Essentially, President Draghi needed to fire a bazooka to increase the ECBs balance sheet and fight deflation, and now politicians need to implement structural reforms.”