HALISTER1: Target -20bp Yield on 10Y Bunds, Expect Flatter Curves: BNP

Target -20bp Yield on 10Y Bunds, Expect Flatter Curves: BNP

(Bloomberg) -- Structural forces favor low euro-zone inflation and bond yields, BNP Paribas strategists including Eric Oynoyan write in client note.
  • Latest ECB announcements increased the 2016 net negative EGB supply by potentially EU50b
  • TLTRO II is very supportive for the banking sector and favors tighter spreads vs swap
  • Long duration on 10Y bund targeting -20bp and 10Y OATs targeting 10/15bp by year-end
  • Renewed flatter curve up to 10y bund, 15y on OAT with unchanged depo and increased buying from PSPP as of April
  • Long 10y/15y OAT, 20y ATS and 30y OAT vs swap; expect spreads to return to November lows
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Eric Oynoyan (BNP Paribas SA)

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