German 10y yields at 10bp. They may soon reach -5/-10bp.
Although it is likely that rates will stay low for another 18months, the speed at which they are going down is going to decelerate (something like sep09/mar13).
The Bund will have small oscillations around a upside drift.
Overall yields could trade within +40bp/-40bp until it is over.
Note: If Bund was to follow roughly the path to 166 in Sep16, the waves I and V would be of similar magnitude and duration (22%, ~3y)
Important take away: The big short is probably much later (probably after the ECB programme abates and this technical picture is complete)
There will be relatively safe trading on small moves when corrections windows are provided.
First trade on the radar:
- Early May: short 100% 161.40 target 158.30
Although it is likely that rates will stay low for another 18months, the speed at which they are going down is going to decelerate (something like sep09/mar13).
The Bund will have small oscillations around a upside drift.
Overall yields could trade within +40bp/-40bp until it is over.
Note: If Bund was to follow roughly the path to 166 in Sep16, the waves I and V would be of similar magnitude and duration (22%, ~3y)
Important take away: The big short is probably much later (probably after the ECB programme abates and this technical picture is complete)
There will be relatively safe trading on small moves when corrections windows are provided.
First trade on the radar:
- Early May: short 100% 161.40 target 158.30
