Should BTPs become the new benchmark for Europe?

- Overview: "Significant challenges remain for EMU but we see the issue as being contained. We do not think Europe should have a meaningful impact on global rates."
- "Extremely low Bund yields may be distorting valuations of risk premia in Europe. We look in more detail at how this has impacted the market."
- US Rates Strategy: "We speculate about the possibility of further monetary easing by the Fed: why they might do it, what would trigger it, its timing, the likely instruments used, and its size."
- Euro Rates Strategy: "We examine whether France’s current pricing is justified by expected fundamental improvements. We also build on and expand last week’s examination of curvature, including at the very long end."
- Global Inflation Strategy: "Shifting supply pressure, rich AsW valuations, and the historically tight level of breakeven inflation boxes all suggest switching out of BTPei into OATei."
- APAC Rates Strategy: "We have reached our entry target to buying 10yr Australia. We continue to recommend receiving 6-mth NZD OIS versus paying 6-mth AUD OIS with a target of 175bps and a stop of 140bps."
- JGB Rates Strategy: "We recommend a 7s30s swap flattener. We expect rates to decline in the second half of September, to rise only modestly, if at all, in October, and to decline in November. Further monetary easing could come in Q4."
- Flow Analysis: "There are further signs in last week’s flow data that the bears’ hibernation may almost be over. Within Europe demand seems to be swinging away from peripherals in general rather than from individual countries."


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