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ECB Cuts Are ‘Green Light’ for Yield Curve Trade, Says SocGen
There’s still time for investors to bet on steeper yield curves as the European Central Bank’s first interest-rate cut gets closer, according to rates strategists at Societe Generale SA. ECB President Christine Lagarde caught markets off-guard on Thursday, when she failed to push back on the extent of easing priced by markets for this year. Traders rushed to price in a quicker start to cuts, triggering a sharper fall in shorter-dated rates which are more sensitive to monetary policy than longer ones — a so-called steepening of the curve. It’s a trade that repeatedly caught investors out last year, as sticky ... (full story)