Outlook for EU rates

ECB plans to buy €60bn of private and public sector debt per month (PSPP) until Sep-2016

Purchases of government debt set at yield limit of -0.20% (deposit rate)

Societe Generale notes as follows ....

• 10y Bund yields and swaps forecast to rebound from Q3 onwards
  
  
• Lower euro and upturn in economic indicators to lift inflation expectations, steepen the yield curve
  
  
• 3-month euribor to fall in to negative territory (-0.01%) by end-2015
  
  
• 10y Bund forecast lowered to 0.40%, 10y swaps target cut to 0.80% by end-2015