What we're watching in markets - TDS

Analysts at TD Securities explained that Italy remains a key sentiment driver after the government has intensified its anti-EU rhetoric.

Key Quotes:

"10y BTP/Bund spreads continue to trade around the 305bp mark as investors doubt the optimistic growth projections in Italy's budget statement. Downbeat sentiment should support our view for wider 2-5y EUR swap spreads."

"Sterling is also back in focus this week as the UK government is set to announce its latest plan for the Irish backstop. Ahead of this, vol markets have started to price in risks of another sharp GBP depreciation now that the end-March deadline is within the 6M window. These could have room to extend if EU/UK relations sour further."

"Our expectation for a soft monthly GDP print in Norway suggests the short-squeeze in EURNOK could extend. We continue to like the cross lower, however, and see value in selling into rallies toward 9.60."