With the deal on Greece in place financial markets are back to trading on macro fundamentals. In this piece we give a quick recap of our views on fixed income and FX markets for the remainder of 2015.
Technicals are set to support the EUR fixed income markets over the summer, in our view. In the medium term though, bond yields should move higher driven by a rise in US yields as the Fed starts hiking rates and unemployment continues to decline. We look for underperformance of US versus euro fixed income, especially in the 0-5-year end of the curve.
Although the periphery has already rallied on the back of the Greek deal, we expect the positive sentiment to remain in place a bit longer.
In Scandi govies, we continue to look for more yield spread compression versus the euro. EUR/SEK is set to continue to be range bound in the coming months. On NOK, we remain bullish in the long run but near term it remains under pressure from low oil prices and rising liquidity.
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