EURO$ CURVE
Above is a snapshot of red/green pack spread in ED’s. (Second panel is reds/golds). Red/ green settled -7.625 bps, the lowest since the year 2000, (pressured in part by Y2K concerns). Of course, March is going to roll off the board In a week and a half, but the NEW red/green pack spread is still -4.25. In the US, there is talk of letting the economy ‘run hot’, the idea of further rate hikes has nearly been eliminated. B
Some of the current price action may be influenced by the idea of ECB engaging in new TLTROs.
The second panel is red/gold pack spread. Same idea as red green, except that at the end of the year it rallied from -5.625 to +22.25 as stocks were imploding (and the Fed had just hiked in the middle of Dec). That spread is now around 8 bps, halfway back.
