What happens to bunds if ECB rates stay low for longer?

AXA
By March 5, 2019 01:01

What happens to bunds if ECB rates stay low for longer?

Rates market monthly review

The Eurozone manufacturing Purchasing Managers’ Index (PMI) dropped almost 10 points during the course of 2018 (Exhibit 1), anticipating a slowdown in economic activity that raises a whole set of questions about the length of the current business cycle as well as the incremental benefits of an expansionary monetary policy stance. Markets have quickly re-priced their European Central Bank (ECB) expectations (Exhibit 2), shaving off about 10 basis points (bps) from the Euro overnight index average (Eonia) curve by September 2020 (currently, 15bp are priced in by that date). Unsurprisingly, ECB speakers have taken stock of the changing macroeconomic and market environment and the tone of official pronouncements has clearly become more dovish. 

AXA
By March 5, 2019 01:01

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