The correction may be over for now

  • Macro-economy

The exit from the “reflation trade” continued yesterday with a strong decline in equities and new lows for bond yields (1.25% for the US 10y). China fueled growth fears by signaling it could ease its policy very soon again. But the trend seems to be reversing (1.33% now): the sharp fall in bond yields has likely been amplified by technical factors and fears about the impact of the Delta variant on growth exaggerated.

us 10y bond yield

The ECB unveiled the outcome of its strategic review yesterday and conformed that the inflation target would now be 2% instead of “below but close to 2%”. Like the Fed, the ECB will also tolerate temporary overshooting and asset purchases will now include climate change criteria. The rebound in the EUR/USD that followed the announcement was likely a classic “buy the rumour, sell the fact” move. EUR/USD edged down again overnight to trade around 1.1830 now.

The economic agenda is light today. As explained above, the reflation trade could pick up some steam today.

Share this news :

You might also read :

ES-power
March 25, 2022

EUA clawed back losses amid low liquidity

The European power spot prices inched up yesterday as the expectations of lower French nuclear availability offset the forecasts of stronger wind output and weaker…
ES-economy
May 4, 2022

Fed day

Unemployment data released for the Euro Area yesterday showed a continuous improvement of the job market with a new record low at 6.8% in March 2022 (see…
ES-oil
May 10, 2022

Oil drops on global sell-off

Oil benchmarks slumped yesterday: ICE Brent front month lost -5.7% and ended the day at $105.94/b and NYMEX WTI front month closed -6.1% lower at…
Join EnergyScan

Get more analysis and data with our Premium subscription

Ask for a free trial here

START A FREE TRIAL
Subscribe to our newsletter
LOG IN

Don’t have an account yet? 

Sign up here!
[booked-calendar]