The European Central Bank (ECB) did not buy any government bonds last week, the first time it has stayed out of the market since the Irish bailout was announced.
The ECB has spent €76.5bn buying government bonds since May last year, targeting the purchases to stabilise prices when private sector investments looked likely to drive up borrowing costs for governments by dumping the bonds. It failed to buy bonds in only four weeks since May.
Just two weeks ago, the ECB spent €2.3bn buying bonds, part of a concerted effort to create the optimal conditions for an auction of bonds by the government of Portugal. Since then the ECB has spent just €146m on the programme.
Brian Barry, an analyst at Evolution Securities, said the ECB was a reluctant buyer of bonds. With the market calm last week, it took the opportunity not to intervene.
"They don't want to buy bonds, so if they think they can get away without doing so they will avoid it," he said.
He said European bond markets were calm last week in anticipation of an announcement that the European Financial Stabilisation Find would be authorised to take over the bonds purchase programme by the end of March.
"That expectation is putting a floor on prices," Mr Barry said.