HALISTER1: Favor Back-End EUR Steepeners; ECB May Use Rate Tiering: HSBC

Favor Back-End EUR Steepeners; ECB May Use Rate Tiering: HSBC

(Bloomberg) -- ECB would probably like a steeper EUR curve because flat curves with a deeply negative depo rate may hamper banks’ maturity-transformation practice, HSBC strategist Subhrajit Banerjee writes in client note.
  • ECB excess liquidity is skewed toward core banks, which means they will feel the pressure most in deeply negative rates
  • Favor steepeners at the back-end as QE and private-sector demand can put flattening pressure up to the 10y part
  • Expect ECB will be able to engineer steeper curves via a deeper negative multi-tiered depo system
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Subhrajit Banerjee (HSBC Bank PLC)

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