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Citi: Bunds Still On Cheap Side Of Fair Value, Although Rally Difficult To Fade At Present

BUNDS

As of yesterday’s close Citi believe that “Bunds still look ‘cheap’ (to the tune of 16bp) in our fair value regression, dominated by inflation risk premium and the policy outlook. Bund yields have kept up but not caught up with fair value ever since it (correctly) turned to a ‘buy’ on 29 September.”

  • “While we believe the long-term scope to rally is starting to look a little limited from this starting point, the fair value signal suggests a need for caution in fading the rally just yet, especially as the ECB may find it hard to deliver a credible pushback to market pricing on Thursday.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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