The start of QE should keep the mood upbeat in the FI space, with ongoing spread tightening in the periphery and bull flattening on the German curve.
Unicredit notes in a report on Monday:
- ECB president Mario Draghi's statement that the central bank will buy bonds at negative yields up to the depo means that the reserve price is still far from current market levels and this should provide room to buy what they have pledged to.
- A second implication is that, with the Schatz already trading at -0.20%, all the upside is at longer tenors


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