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12 Mar 2015
European yields continue to grind lower – Danske Bank
FXStreet (Edinburgh) - Pernille Nielsen, Senior Analyst at Danske Bank, assessed the recent performance of the European markets.
Key Quotes
“Once again the long end led the move with a aggressive curve flattening where 30Y EUR swap rates declined below 1%”.
“Bond investors have basically moved future income forward with the capital gain received these days (30Y Germany has returned more than 7% in return this week so far) being countered by locking in a very low yield in the future (closed below 0.70% in yield)”.
“Thus, buyers of core European bonds must hope for further capital gains at these elevated levels, as the very modest yield levels are not providing much cushion to withstand any opposite price movements”.
Key Quotes
“Once again the long end led the move with a aggressive curve flattening where 30Y EUR swap rates declined below 1%”.
“Bond investors have basically moved future income forward with the capital gain received these days (30Y Germany has returned more than 7% in return this week so far) being countered by locking in a very low yield in the future (closed below 0.70% in yield)”.
“Thus, buyers of core European bonds must hope for further capital gains at these elevated levels, as the very modest yield levels are not providing much cushion to withstand any opposite price movements”.