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8 May 2015
Bond markets in Euroland remain in the spotlight – BAML
FXStreet (Edinburgh) - According to analysts at BAML, debt markets in the euro area will remain in the centre of the debate.
Key Quotes
“We continue to look for higher rates, with the recent sell-off giving us encouragement that, as previously argued, Bund yields may not be a one-way street”.
“In our view, the market is focusing more on the perceived asset shortage rather than the improving data, allowing long dated forwards to rally”.
“With reinvestment risks continuing and QE liquidity likely directed towards loan origination, we look for a partial unwind of this move as sellers emerge. In the front-end, Q2 and Q3 Euribor forecasts have been revised slightly lower”.
Key Quotes
“We continue to look for higher rates, with the recent sell-off giving us encouragement that, as previously argued, Bund yields may not be a one-way street”.
“In our view, the market is focusing more on the perceived asset shortage rather than the improving data, allowing long dated forwards to rally”.
“With reinvestment risks continuing and QE liquidity likely directed towards loan origination, we look for a partial unwind of this move as sellers emerge. In the front-end, Q2 and Q3 Euribor forecasts have been revised slightly lower”.