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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
BTP
The 10Y BTP/Bund spread is now 17bp wider than pre-ECB levels, having widened by as much as 25bp to 221bp at one point earlier today. That's the widest differential since the previous ECB meeting in October.
- The widening is due, quite simply, to concerns over more aggressive ECB tightening ahead.
- That is partly on the basis of plans to start asset runoff iin Mar '23.
- Lagarde insisted Thursday that policy rates were the primary tool and balance sheet reduction wouldn't have a significant impact - but the underperformance of BTPs suggests that markets are taking a more pessimistic view of the QT effect on periphery EGBs.
- More generally, the price action is closely tied to the tighter rate stance.
- The BTP spread move has correlated step by step with changes in the ECB terminal rate - which has risen 40bp since pre-ECB - see chart.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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