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A busier afternoon session


A busier afternoon session for EGBs with mainly some short covering, after ECB commented on Negative rates.

  • Based on our experience, negative rates are an effective tool for providing monetary accommodation. It provides additional stimulus to the euro area economy. Negative rates in the euro area are passed on to corporates in many cases.
  • As far as households are concerned, it is 5% of deposits that have negative rates imposed. It is higher than that in Germany. I appreciate that people who are saving are not satisified with being charged negative rates.
  • But we have to look at the whole economy. Negative rates supporting the economy
  • Bunds have paired most of the early weakness and trade back above the 171.00 handle.
  • Curve is edging back bull flatter, albeit within ranges.
  • Peripheral continue to trade inline with the German 10yr and spreads trades mainly flat on the session.
  • Bund futures are down -0.05 today at 170.83 with 10y Bund yields up 0.4bp at -0.259% and Schatz yields up 0.5bp at -0.696%.
  • BTP futures are down -0.05 today at 148.26 with 10y yields up 0.8bp at 0.760% and 2y yields up 1.2bp at -0.352%.
  • OAT futures are down -0.06 today at 161.48 with 10y yields up 0.5bp at 0.078% and 2y yields up 1.0bp at -0.653%.

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