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Periphery Correlation With ECB Hiking Expectations Largely Intact

EGBS

Periphery EGB spreads look to be ending the week on a sour note: BTP spreads widening pretty sharply today, with 10Y out 8.5bp vs Bunds - through 200bp but still off the 206bp May high. 17+bp wider in Greek spreads as well.

  • Not quite true on an intraday basis, but bigger picture, correlations with ECB hiking expectations remain intact. The risk-on/risk-off correlation with stocks has been pretty limited overall over the past week or so though - and the sharp retracement in equities this afternoon hasn't really had any impact on BTP spreads.

10Y BTP Spread, End-2022 ECB Rate Hike Pricing, And Eurostoxx Future (Inverted)Source: BBG, MNI

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Periphery EGB spreads look to be ending the week on a sour note: BTP spreads widening pretty sharply today, with 10Y out 8.5bp vs Bunds - through 200bp but still off the 206bp May high. 17+bp wider in Greek spreads as well.

  • Not quite true on an intraday basis, but bigger picture, correlations with ECB hiking expectations remain intact. The risk-on/risk-off correlation with stocks has been pretty limited overall over the past week or so though - and the sharp retracement in equities this afternoon hasn't really had any impact on BTP spreads.

10Y BTP Spread, End-2022 ECB Rate Hike Pricing, And Eurostoxx Future (Inverted)Source: BBG, MNI