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EZ spillover risks and the rest… - BMO Capital Markets

FXStreet (Guatemala) - Stephen Gallo, European Head of Currency Strategy at BMO Capital noted that G10 FX ranges were tight during the London morning.

Key Quotes:

“But this was not the case in the bond market, where yields fell pretty sharply. The 10yr UK government bond’s price outperformed and Germany briefly ticked below 1.00% in yield."

"But global bond yields appear to be responding synchronously to ‘spillover’ risks from weak Euro Area growth, geopolitical tensions, and reduced expectations for the start of the BoE’s normalisation cycle. The week has not turned out to be a good one for macro economic ‘divergence’, and this explains the tight G10 ranges. ‘Carry’ was a better performer, however, possibly on the move lower in key market rates, and possibly on the view that some central banks will be forced keep policies looser for [even] longer."

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