Markets unlikely to price ECB rate hikes for the next 12 months - Danske Bank

Eren Sengezer FXStreet

"We have cut our yield forecasts a little further," announced Danske Bank research team. "We are now even more certain that both short-term and long-term yields are set to stay low for the rest of 2019 and far into 2020."

Key quotes

"We have pushed back our call for the next ECB rate hike (policy rate currently at -0.40%) from H2 20 to early 2022. As such, we no longer expect the fixed income market to price rate hikes during H1 20."

"As a result, we expect German Bund yields to trade at close to zero for the next 12 months. Risk appetite will be the main determinant of yield levels. Due to the trade conflict, risk aversion is currently high, but we expect it to subside slightly on a 12-month horizon. We expect 10Y Bund yields at 0.15% (0.30%) 12 months from now. "

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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