Investing.com - Financial Markets Worldwide

Strategy - EUR: A Reality Check Of The Short-End Of The Curve‏

ByDanske Markets
Published 02/27/2013, 06:30 AM
Updated 05/14/2017, 06:45 AM

The EONIA curve has moved lower and the current curve (dark blue line) is now close to the December curve. What are the implications of the current curve?

1. Reduced downside for short-end EUR rates

2. The curve is not inverse, so deposit cuts are not priced in. Rather, the market is looking for a very slow normalisation.

3. Last week's announcement of repayments of LTROs was below expectations. It could be that some banks have decided to postpone repayments due to Italian election uncertainty.

4. The forward curve for 2013 is pretty flat. DEC-13 IMM Eonia around 0.15%, consistent with excess liquidity above EUR200bn throughout 2013. We believe the curve for 2013 is pretty fair.

5. The 2014 curve is now too flat, in our view. Dec-14 IMM Eonia around 0.39%. This could be consistent with excess liquidity remaining around EUR50-EUR200bn by end-2014. We believe the EONIA O/N will be above 0.50% by end-2014.

To Read the Entire Report Please Click on the pdf File Below.

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.