Monday, 04 November, 2024
Strategists at Barclays say the recent steepening of the Euribor curve is excess
Strategists at Barclays say the recent steepening of the Euribor curve is excessive and recommend flatteners to position for a slower cadence of ECB interest-rate cuts. Goldman Sachs analysts write that risk reward favors lower yields in coming quarters while SocGen strategists are looking for opportunities to buy German bonds.
Barclays: (strategists including Rohan Khanna)
- Recommends June 2025 – December 2025 Euribor flattener to fade the recent aggressive steepening which has lifted the spread toward 0bps; trade stands to benefit from a slower pace of ECB rate cuts such as quarterly moves, or from a deeper easing cycle
Goldman Sachs: (strategists including George Cole)
- Risk reward in the UK gilt curve is balanced near-term and skewed toward lower yields in coming quarters with the BOE forecast to lower interest rates this week and the market already betting on a shallow easing cycle
SocGen: (strategists including Jorge Garayo)
- Recent bund selloff could provide opportunities to re-load longs after the US election outcome is known; a more stable period in Eur rates, coupled with more clarity on fiscal trends, could provide more stability on Eur curve dynamics and swap spreads
