EGB market to continue to focus on the ECB purchases

Yesterday, a strong performance in core fixed income markets was seen as the ECB initiated its purchases. Besides the QE programme finally being started there were no apparent drivers for the rebound in bond markets.

Especially the very long end of the German curve saw strong performance as yields were down some 10bp. 

Fundamentally it does not make sense that 30Y yield in Germany is as low as 0.90% but the QE and regulatory-led demand continue to outweigh the fundamentals in Europe, which are now finally starting to look a bit better.
 
Danske Bank notes as follows on Tuesday:

• We expect the EGB market to continue to focus on the ECB purchases.
• All in all we see no reason why the positive bond sentiment should not continue today. Germany will launch a new 10Y linker benchmark, DBRei 0.1% Apr'26. 
  
  
• We expect solid demand despite the recent strong performance in the linker market, where BEI-rates have widened significantly. However, looking at a longer horizon the BEI-rates are still low and theECB is also buying the linker bonds.