EU rates outlook

The initial reaction in the European fixed income market to the ECB QE launch has been significant. 

The long end has led the move and we have seen an aggressive curve flattening with 30Y German sovereign bonds as low as 0.70%. 

Danske Bank notes in a report on Monday:

• We believe the move lower in EUR rates is a bit overdone and we do not expect long-end yields (10Y) to move lower. 
  
  
• We expect the EUR curve to steepen gradually from the very long end going forward, as we believe higher growth and inflation expectations will outweigh the direct effect on prices of QE purchases.