9 Jun 2015
German Bunds remain in the limelight – Danske Bank
FXStreet (Edinburgh) - Chief Analyst Kasper Kirkegaard at Danske Bank assessed the recent performance of the German debt markets.
Key Quotes
“The sell-off in core European bond markets continued yesterday, although less violently than last week. Positioning remains a key driver, as Q1 consensus trades are unwound (the rise in EUR/USD is testimony to this), but the trough in European inflation and improving macro data are also affecting the market”.
“The 10-year German government bond yield rose back towards 0.9% (the peak so far was Thursday’s 0.99%) after comments by ECB's Nowotny saying that higher yields are an indication that QE is a success - following up on the comments by Draghi last week that we should get used to higher volatility in the bond market”.
“Our fixed income research team considers the latest move lower in Bunds excessive but the elevated volatility makes it unattractive to be long in this market”.
Key Quotes
“The sell-off in core European bond markets continued yesterday, although less violently than last week. Positioning remains a key driver, as Q1 consensus trades are unwound (the rise in EUR/USD is testimony to this), but the trough in European inflation and improving macro data are also affecting the market”.
“The 10-year German government bond yield rose back towards 0.9% (the peak so far was Thursday’s 0.99%) after comments by ECB's Nowotny saying that higher yields are an indication that QE is a success - following up on the comments by Draghi last week that we should get used to higher volatility in the bond market”.
“Our fixed income research team considers the latest move lower in Bunds excessive but the elevated volatility makes it unattractive to be long in this market”.