We wouldn’t read much into the recent contraction in swap spreads in Germany. Despite turning negative, the 10-year euro-zone OIS/Bund spread is not far below its level before the pandemic. And it remains well above 10-year US OIS/Treasury and 10-year UK/Gilt spreads. To paraphrase Mark Twain, we think rumours of the demise of Bunds as the eurozone’s benchmark are greatly exaggerated.
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