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EUR rates: Taper hedges
The taper hedges that we recommended before summer turned out to be premature. Lower USD and EUR rates over the summer reflect a combination of three factors: 1) short duration positions going into the summer, 2) peak, transitory USD inflation as used car prices ran out of fuel and the Fed stuck to its transitory narrative, and 3) the ECB’s “new” strategy and QE prolongation that could lead to collateral scarcity. charts Still, also during the second half of the year, the risk-off case relates to Fed tapering. Will markets see some positioning for a hawkish surprise at this weeks Jackson Hole Symposium (26-28 ... (full story)
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