An Economic Winter Grips the Euro
- Bund yields could turn negative within six months: Citigroup
- SocGen favors short position in euro versus pound, yen, Aussie
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Just three weeks into 2019, analysts’ conviction this will be the year of the euro -- and higher bund yields -- is being tested.
The common currency has declined against each one of its Group-of-10 peers outside Europe as slowing euro-area growth, stalling inflation and lingering political risks hold investors back. Benchmark bund yields, meanwhile, are trapped near the lowest level in two years, setting the stage for “deeply negative” rates within six months, says Citigroup Inc. NatWest Markets contends the recent slide in Japanese yields into negative territory is a precursor for where bunds are headed.