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3 Apr 2015
EUR to weaken as fixed income outflows might approach record highs in medium-term - Nomura
FXStreet (Barcelona) - FX Strategists at Nomura see more downside room for EUR, as fixed income outflows from the euro area likely remain high.
Key Quotes
“In the medium term, yield spreads between the euro area and foreign economies should be the key driver of net based fixed income flows, as the impact of risk sentiment is likely to be cancelled out by inflows and outflows."
“Foreign LT bond investment (outflow) by euro area investors is likely to approach the biggest amount recorded (€300bn per year in 2006-07) under a positive risk scenario.”
“The 10yr yield spread between the US and the weighted average of other G10 economies is at its most negative level for the euro area, which should sustain the record level of fixed income outflows from the euro area, sending EUR gradually lower.”
Key Quotes
“In the medium term, yield spreads between the euro area and foreign economies should be the key driver of net based fixed income flows, as the impact of risk sentiment is likely to be cancelled out by inflows and outflows."
“Foreign LT bond investment (outflow) by euro area investors is likely to approach the biggest amount recorded (€300bn per year in 2006-07) under a positive risk scenario.”
“The 10yr yield spread between the US and the weighted average of other G10 economies is at its most negative level for the euro area, which should sustain the record level of fixed income outflows from the euro area, sending EUR gradually lower.”