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Greek and Italian 10-year yields shoot higher - BTMU

FXStreet (Łódź) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ looks at the reversal of the momentum trade in the foreign exchange market on Wednesday.

Key Quotes


"It is also worth posing the question – what other obvious momentum trades have been in place in 2014? Well, the fall in periphery yields in the euro-zone has certainly been a momentum trade – indeed it has lasted far longer than just this year and has been in place since OMT was signalled in the summer of 2012."

"Greek yields shot higher yesterday, but at least with Greece there was a reason - renewed political uncertainty and the potential for an election early next year."

"But the 10-year yield also shot higher in Italy – by 12bps – don’t forget on a day when US yields plunged."

"That’s the momentum trade to watch closely, as a reversal of that trade would truly spook investors and immediately spark fears for a return to the debt crisis and would result in heavy EUR/USD selling."

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