-
EUR rates: Strategy review
The ECB’s new policy framework makes it more likely to succeed with balance-sheet normalisation, leading to steeper curves and tighter asset swap spreads eventually. Markets may have been off to a head start, though. Today, the ECB published its new policy framework. Near-term implications are mostly in the nitty gritty stuff while the longer-term implication is that the new framework will make it more likely that the ECB can complete policy normalisation without liquidity stress, leaving curves steeper and asset swap spreads tighter. USD liquidity tides are turning and Q2 could see a drain of up to USD 600bn, ... (full story)