Euro zone government bond yields soared on Thursday as money markets advanced their bets on up to four rate hikes by the ECB this year, after its President Christine Lagarde opted not to repeat her earlier comment. that a rise in 2022 is highly unlikely.
In a note published after the ECB’s governing council’s decision on monetary policy, Deutsche Bank strategists said Lagarde “has clearly signaled a shift from a dovish calendar-based outlook to something much more active.”
“In effect, (the ECB) is validating the easing of the European interest rate curve this year and turning the ECB into a living central bank,” George Saravelos, strategist at Deutsche, said, adding the closure of his recommendation for short positions.
“Therefore, we closed our short FX Blueprint recommendation at close to flat and now enter a long EUR/USD position,” he wrote in a note to clients.
Source: Ambito
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