Peter Chatwell at Mizuho issues a tactical.....>

EGBS: Peter Chatwell at Mizuho issues a tactical long German trade idea for the

next two weeks.

- "Supply hurdles have been cleared for EGBs and we think this opens a window

for EUR duration to perform into the ECB meeting." He targets a German yield of

0.35%,with a stop at 0.52%.

- Behind this market view is a macro view that the strong euro will prolong the

ECB's tapering. At the October ECB meeting Mizuho see an announcement of a taper

to E40bln per month, but open ended, although formally reviewed on a quarterly

basis. 

- By making an open ended QE programme, Chatwell expects Bund limits will be

"reached by H2 2018".

- Furthermore, this implies "that PSPP exploits the current ability to deviate

away from the capital key. This would entail PSPP continuing to overweight

French and Italian bonds, and therefore providing a mild sovereign-spread

tightening force."