7 Dec 2015
Market positioning going forward: Let the dust settle after ECB – Nomura
FXStreet (Delhi) – Research Team at Nomura, still thinks that a subdued inflation path in the euro area will force the ECB into further easing in 2016 (which could entail more QE in size and pace as well as another deposit rate cut) and they do not want to rush into changing their strategic positioning on the back of Thursday’s drastic price action.
Key Quotes
“However, over the near term we could see some further correction of positioning given how geared up markets have been for significantly more ECB easing at the current stage and the prospect of more to come.”
“We see risk assets being more exposed than fixed income given that a further sell-off in equities will eventually support core EGBs. While our strategic positioning in form of 7y Bund ASW wideners, 1f1y vs. 3f1y Eonia forward flatteners as well as regression-weighted 5y-10y-30y EUR IRS butterflies has suffered on the back of the ECB, we prefer to let the dust settle before we reevaluate.”
Key Quotes
“However, over the near term we could see some further correction of positioning given how geared up markets have been for significantly more ECB easing at the current stage and the prospect of more to come.”
“We see risk assets being more exposed than fixed income given that a further sell-off in equities will eventually support core EGBs. While our strategic positioning in form of 7y Bund ASW wideners, 1f1y vs. 3f1y Eonia forward flatteners as well as regression-weighted 5y-10y-30y EUR IRS butterflies has suffered on the back of the ECB, we prefer to let the dust settle before we reevaluate.”