HALISTER1: Favor Bund Shorts as ECB Unlikely to Ease for Now: Commerzbank

Favor Bund Shorts as ECB Unlikely to Ease for Now: Commerzbank

(Bloomberg) -- Commerzbank prefers shorts in bund futures, eyeing a setback to around 165.80 on view residual expectations for an ECB rate cut today won’t be met, analysts David Schnautz and Michael Leister write in client note.
  • See focus on changes to the PSPP framework; abandoning the depo floor for purchases is the most likely option to address bund scarcity, which argues for further steepening of the curve and underperformance of longer-dated swap spreads
  • Today’s monetary policy decision will probably be of less relevance for the FX market than for the interest-rate market, currency strategist Antje Praefcke writes in separate note
    • It is clear after all that the ECB will not be considering any new expansionary measures before September when the new projections are also due for publication
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Antje Praefcke (Commerzbank AG)
David Schnautz (Commerzbank AG)
Michael Leister (Commerzbank AG)

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