###POV. There was a smug look on Draghi's......>

EGBS: ###POV. There was a smug look on Draghi's face on Thursday mainly because

the market failed to react significantly to the tapering announcement. Less

tantrum, more shrug. Draghi was already armed with that market reaction

information, strongly hinting that all those leaky source stories were

deliberately done.

- This press conference and set of monetary policy actions opens the gate for

the carry trade again. For most EGB curves, this implies sitting in the 5-10Y

sections of curves, sitting in the periphery while avoiding 2Y Germany.

- However, we are also told that redemptions will matter a lot in 2018. Does

this imply that investors should avoid countries with elevated weighted average

maturities in the PSPP?

- If this is the case, Belgium has a WAM of 10.26 years and Austria 9.1 years.

Even Spain is quite high at 8.4 years.

- Within the big countries, Germany comes in lowest at 6.8 years. 

- Carry trades may favour the periphery but flows favour Germany. The semi-core

may not benefit from either.