“Today will never happen again. Don’t waste it with a false start or no start at all”
Hi there, today will be a pip winning day as we expect the markets to trade smoothly..
The market is still scrutinizing any news from the FOMC and tonight we have both Bullard and Evans on the wires.Initial jobless claims will also be watched to get a first idea of the strength of the US labour market in February.
Risk appetite returned to the European government bond market yesterday and especially the periphery bond markets, including France, performed well and spreads tightened against Germany. French 10Y yields dropped close to 10bp. However, bunds were also supported and German 10Y yields were pushed below 0.3% again.
German 2Y yields were pushed to a record low of -0.80%, fuelled by the ECB now buying bonds with a yield below the depo rate at -0.40% and the tight repo situation. There is no single explanation behind the sudden support to France and periphery markets. But many investors probably concluded that the spread levels, for example, for France, which we have not seen this wide since the debt crisis in 2012, were starting to look attractive.
Short covering was probably also a part of the story. Reassuring words from ECB president Mario Draghi furthermore supported sentiment. According to Bloomberg, Draghi said that he sees the ECB maintaining an accommodative policy until the end of his term in October 2019. It seems that Draghi is well aware that any talks about ECB tapering or less accommodative policy are very negative for periphery bond markets. The European bond market has also been weighed down by a severe supply wave this week with new bonds from the Netherlands, Belgium, Finland and the EFSF. The supply is now slowing down.
Forex Trade Idea: We are USD bearish today
Today’s Lesson: Do everything with love.
You have to work very hard whatever it is you choose to do. Your work or your project will dominate much of your time and your life. Therefore, find something that you enjoy doing and do that.