30 Mar 2015
Periphery bonds look attractive – Danske Bank
FXStreet (Edinburgh) - In the view of analysts at Danske Bank, the recent sell-off in periphery bonds could give investors a good entry-point.
Key Quotes
“The trend for tighter spreads between peripheral euro bonds and Germany has continued unabated this year fuelled by stronger growth and ECB’s QE”.
“However, over the past weeks we have seen some spread widening within the declining trend”.
“We believe the sell-off in peripheral bonds leaves a good entry point for investors wanting to put on or add risk in the periphery”.
“First, the declining trend will continue in our view as we expect more upside surprises on growth and ECB’s QE will keep demand firm for euro bonds. Secondly, flows will support demand in coming weeks”.
”Index extension flows going through early next week will benefit Italy and Spain. Coupon payments and redemptions also add to demand and the excess liquidity is moving higher intensifying the ‘hot potato’ effect”.
Key Quotes
“The trend for tighter spreads between peripheral euro bonds and Germany has continued unabated this year fuelled by stronger growth and ECB’s QE”.
“However, over the past weeks we have seen some spread widening within the declining trend”.
“We believe the sell-off in peripheral bonds leaves a good entry point for investors wanting to put on or add risk in the periphery”.
“First, the declining trend will continue in our view as we expect more upside surprises on growth and ECB’s QE will keep demand firm for euro bonds. Secondly, flows will support demand in coming weeks”.
”Index extension flows going through early next week will benefit Italy and Spain. Coupon payments and redemptions also add to demand and the excess liquidity is moving higher intensifying the ‘hot potato’ effect”.