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Bond Trade That Rests on Slower And Smaller Fed Cuts Gets Tested.
In: Bloomberg.com, 2024-05-01, S. N.PAG
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Zugriff:
Insight Investment Management Ltd and Toronto Dominion Bank are making contrarian calls, buying US Treasuries and selling European bonds, as they believe the market is underestimating the number of interest-rate cuts from the Federal Reserve. This goes against the popular belief that European bonds will outperform US bonds due to the weakening euro-area economy. Insight Investment has initiated a long position on US Treasuries versus European bonds to position for the expected convergence of rate paths. Traders currently expect three quarter-point cuts from the European Central Bank (ECB) and only one from the Federal Reserve, but some investors are starting to question this outlook. The latest economic data from the euro area shows that the bloc exited recession in the first quarter, with inflation stalling in April. Some analysts believe that the ECB may disappoint markets by not committing to consecutive rate cuts after June, while the Federal Reserve is likely to start easing in September. Pooja Kumra, head of European rates strategy at TD, recommends tactically buying 10-year Treasuries against equivalent German bonds, targeting a spread drop to 170 basis points in two to three weeks. [Extracted from the article]
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Bond Trade That Rests on Slower And Smaller Fed Cuts Gets Tested.
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Autor/in / Beteiligte Person: | Oyamada, Aline |
Zeitschrift: | Bloomberg.com, 2024-05-01, S. N.PAG |
Veröffentlichung: | 2024 |
Medientyp: | serialPeriodical |
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