Europe: Bond investors having more eye for the upcoming ECB meeting - Rabobank

Elwin de Groot, Head of Macro Strategy at Rabobank, suggests that in Europe, bond investors seemed to have more eye for the upcoming ECB meeting tomorrow.

Key Quotes

“Peripheral spreads widened alongside a 5bp rise in German 10-year yields. Against the backdrop of a string of better economic (survey) data off late and the French election result, there is at least some reason to expect (or be concerned) that the game between the doves and hawks in the Council could be on again.”

“The hawks could use the latest developments as an excuse to put renewed pressure on the doves to reign in monetary stimulus at the earliest date feasible. The Eonia forward for the December ECB meeting swap rose almost 1 basis point. That may not sound like a lot but it followed a sharper rise on Monday taking the move since last week to almost 3bp. That’s equivalent to a 30% rise in the probability of a deposit rate hike by that time.”