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11 Mar 2015
Bunds to remain bid – TDS
FXStreet (Barcelona) - With European yields falling due to Draghi’s bond purchases, Tim Davis, Vice President, Global Strategist at TD Securities, assesses that Bunds might remain bid, further maintaining the Q2 0.30% forecast for 10y bunds.
Key Quotes
“In previous cases of QE in the UK and US, we have seen yields start to rise soon after purchases began, partly as a result of inflation expectations reflating.”
“However, we think that this is unlikely to happen at least over the next quarter in the bund market, given that it is investors who have to reduce their bund holdings rather than the central bank merely buying the increased size of the bond market.”
“We reiterate our 0.30% 10y bund forecast for end Q2.”
“We think that the net negative supply will be enough to stop bunds selling off with other global bond markets.”
Key Quotes
“In previous cases of QE in the UK and US, we have seen yields start to rise soon after purchases began, partly as a result of inflation expectations reflating.”
“However, we think that this is unlikely to happen at least over the next quarter in the bund market, given that it is investors who have to reduce their bund holdings rather than the central bank merely buying the increased size of the bond market.”
“We reiterate our 0.30% 10y bund forecast for end Q2.”
“We think that the net negative supply will be enough to stop bunds selling off with other global bond markets.”