EUR: Getting more positive – Nomura

Analysts at Nomura suggest that negative yield discount on EUR is likely to diminish further.

Key Quotes

“The ECB has now moved firmly into a tightening phase. As euro area bond yields have risen, the share of negative-yielding bonds has declined further. We estimate there is still a 3-4% negative yield discount on EUR, which should diminish further, as overseas fixed income flows into the euro area are on track to recover. The decline in the share of negative-yielding bonds will also change the flow balance between EUR and JPY. We think the latest reversal in the 5yr bond yield spread is symbolic. We expect a further rise in EUR/JPY to the 140-145 range.”