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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.
EUROZONE
There is scope for further spread tightening in the EUR nominal 1y1y – 5y5y interest rate swap spread should Eurozone growth data continue to disappoint. The latest tightening has largely been driven by external forces (e.g. US growth-related concerns and broader risk-off sentiment), helping the spread move further into negative territory.
- One interpretation of the difference between the 1y1y and 5y5y swaps is that they represent expectations of the Eurozone growth outlook across different time horizons.
- A more negative spread can therefore represent expectations for the Eurozone economy to operate below potential in the coming years.
- The spread currently sits at -24.2bps, down from a YtD high of 43.3bps in late-May.
- However, it remains well above -166bp average seen through 2010 – 2019.
- The EUR real 1y1y-5y5y (i.e. inflation swap adjusted) spread has also turned negative this week at -4.5bps, but again remains above the 2010-2019 average of -99bps.
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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