16 Jan 2015
Short end bond yields see significant tightening – DB
FXStreet (Barcelona) - Analysts at Deutsche Bank share that yesterday’s SNB wreck resulted in contrasting moves between Swiss and European equity markets while short end bond yields witnessing significant tightening, with 2y bunds moving further in negative territory and 2y swiss bonds closing 17.3bps tighter.
Key Quotes
“In terms of the wider market impact yesterday in Europe, there were contrasting moves between Swiss equities and the wider European market. With regards to the former, the SMI (-8.67%) closed sharply lower. Swatch (-16.5%), UBS (-11.1%) and Holcim (-11.0%) in particular were notable decliners with Reuters quoting Swatch’s CEO saying that the moves in the currency is an economic ‘tsunami’ for Switzerland.”
“Outside of Switzerland, European equities did well with both the Stoxx 600 (+2.58%) and Dax (+2.20%) rallying as markets appeared to lean on the hope that the SNB move was a hint that we are getting a larger move from the ECB soon. Credit markets also closed firmer with Crossover finishing 11bps tighter.”
“There was a significant tightening in short end bond yields too. Swiss bonds rallied across the curve, led by 2y yields which closed 17.3bps tighter at -0.528%. All Swiss government bonds up to 8-years in maturity are now trading in negative territory, with 10y yields at just 0.044%.”
“Elsewhere 2y Bunds moved further into negative territory and extended record lows, closing 2.4bps tighter at -0.144%.”
“In fact, 8 European countries now have negative 2y yields whilst yesterday's tightening in 5y Dutch bonds saw them join Finland, Germany and Switzerland with as countries with negative 5y yields.”
Key Quotes
“In terms of the wider market impact yesterday in Europe, there were contrasting moves between Swiss equities and the wider European market. With regards to the former, the SMI (-8.67%) closed sharply lower. Swatch (-16.5%), UBS (-11.1%) and Holcim (-11.0%) in particular were notable decliners with Reuters quoting Swatch’s CEO saying that the moves in the currency is an economic ‘tsunami’ for Switzerland.”
“Outside of Switzerland, European equities did well with both the Stoxx 600 (+2.58%) and Dax (+2.20%) rallying as markets appeared to lean on the hope that the SNB move was a hint that we are getting a larger move from the ECB soon. Credit markets also closed firmer with Crossover finishing 11bps tighter.”
“There was a significant tightening in short end bond yields too. Swiss bonds rallied across the curve, led by 2y yields which closed 17.3bps tighter at -0.528%. All Swiss government bonds up to 8-years in maturity are now trading in negative territory, with 10y yields at just 0.044%.”
“Elsewhere 2y Bunds moved further into negative territory and extended record lows, closing 2.4bps tighter at -0.144%.”
“In fact, 8 European countries now have negative 2y yields whilst yesterday's tightening in 5y Dutch bonds saw them join Finland, Germany and Switzerland with as countries with negative 5y yields.”