On a more mundane note, the 10-year Treasury/Bund spread is in danger of slipping back below 150bp for the first time since last October, which it was pushed lower by Mario Draghi’s promise of further easing., the euro was above 1.13 when that happened and the danger today/this week is that despite the soft German industrial production numbers released overnight (-1.2% m/m, -2.2% y/y), EUR/USD continues to trend higher.
Long EUR/GBP may be the best way to trade this for now, with Brexit concerns very much to the fore in the UK.
As for trades, there’s no real change. We still like shorts in NZD and AUD vs. the CAD, and the sharp fall in bond yields will help these trends.
Long yen vs KRW is a long-standing theme. Short CHF/SEK is not working as SEK weakens ahead of the Riksbank but we’ll stick with this too.
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