Politics Vie With Tapering for Biggest 2017 Driver of Euro Bonds
- Citigroup, RBS see flatter bund curve on QE, political risks
- JPMorgan, Deutsche Bank expect steepening on ECB tapering
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The new year is almost here yet there’s no consensus among analysts on how core European yield curves will evolve in 2017.
Europe’s still-low inflation expectations, rising political risks and the odds of renewed bund scarcity amid debt purchases by the European Central Bank are supporting expectations for lower longer-term yields and flatter curves. On the other hand, slower bond buying by the ECB, the odds of further reduction in such purchases and a potential spillover from improved growth in the U.S. back the argument for steepening.