19 Feb 2015
Growing optimism due to ECB QE could fuel the “sympathy selloff” in euro-rates – RBS
FXStreet (Barcelona) - Edward Acton, Treasury Strategist at RBS, comments that there is decent probability of shift in the European pessimism in the intermediate term as the ECB QE nears.
Key Quotes
“We have begun noticing/commenting that there is a decent chance for a 'turn' in European pessimism in the intermediate term as the 'in QE we trust' mood takes hold. The data backs up this claim as well; the Euro is going on its 4th weekly gain against the consolidating USD, the Euro-Stoxx has outgained the S&P by ~10% ytd (currency unhedged), the Eurozone CESI stands at +46.60 (widest spread over US since spring 2013), and European ETFs are on track for largest ever quarterly inflows with $21.4bn of net new assets in just 6 weeks.”
“This growing optimism could be fodder for the intermediate-term 'sympathy selloff' in Euro-rates that Treasuries may require to trace higher in yield.”
Key Quotes
“We have begun noticing/commenting that there is a decent chance for a 'turn' in European pessimism in the intermediate term as the 'in QE we trust' mood takes hold. The data backs up this claim as well; the Euro is going on its 4th weekly gain against the consolidating USD, the Euro-Stoxx has outgained the S&P by ~10% ytd (currency unhedged), the Eurozone CESI stands at +46.60 (widest spread over US since spring 2013), and European ETFs are on track for largest ever quarterly inflows with $21.4bn of net new assets in just 6 weeks.”
“This growing optimism could be fodder for the intermediate-term 'sympathy selloff' in Euro-rates that Treasuries may require to trace higher in yield.”