16 Jan 2015
Global core bonds profit on SNB’s move – KBC
FXStreet (Barcelona) - The KBC Bank Research Team comments on the SNB’s recent decision, and add that global core bonds profited as a result of the increase in volatility and boost in risk-off sentiment.
Key Quotes
“Yesterday’s shock move from the Swiss National Bank created additional volatility and boosted risk-off sentiment on most markets.”
“The SNB abandoned its floor policy against the euro as the global liquidity glut, a result of the policy choices of the main central banks, overwhelmed the tiny Alp state. The central bank had to buy enormous amounts of especially euros that encumbered its balance sheets. Only on the euro part of its reserves, losses probably mount to at least €50B.”
“Global core bonds profited, but gains were capped in Europe as equities managed an impressive comeback.”
“However, in the US, equities got into the problems (earnings) giving US Treasuries an additional firm push in the back. They ultimately sharply outperformed Bunds.”
“In yields terms, US yields fell 9 to 15.8 bps, with the 30-yr now firmly through the all-time lows (support).”
“In Germany, yields fell by 2.5 and 2.8 bps at the 2- 5 yr sector, while they were little changed at the long end (benchmark change in 10-yr).”
Key Quotes
“Yesterday’s shock move from the Swiss National Bank created additional volatility and boosted risk-off sentiment on most markets.”
“The SNB abandoned its floor policy against the euro as the global liquidity glut, a result of the policy choices of the main central banks, overwhelmed the tiny Alp state. The central bank had to buy enormous amounts of especially euros that encumbered its balance sheets. Only on the euro part of its reserves, losses probably mount to at least €50B.”
“Global core bonds profited, but gains were capped in Europe as equities managed an impressive comeback.”
“However, in the US, equities got into the problems (earnings) giving US Treasuries an additional firm push in the back. They ultimately sharply outperformed Bunds.”
“In yields terms, US yields fell 9 to 15.8 bps, with the 30-yr now firmly through the all-time lows (support).”
“In Germany, yields fell by 2.5 and 2.8 bps at the 2- 5 yr sector, while they were little changed at the long end (benchmark change in 10-yr).”