Rates Outlook 2021: Money for nothing
Our outlook for rates in 2021 is relatively optimistic. That said, there are numerous drags that will contain market rates. A large debt overhang is one.…
The US deficit is eye-watering. And it needs to be financed. Such are the sizes involved that it is not difficult to see how this could be a problem. That…
We are upbeat for 2021. Hence the call for the US 10yr to get to the 1 to 1.25% range. If the stars align we could go higher. But there are drags coming…
The shape of the curve is all about direction in 2021. By 2022 that will likely change as the debate on possible Fed hikes by 2023 will be live, unnerving…
A widening in the Treasury-Bund spread is a classic recovery outcome. It reflects a scenario where the US takes the lead role in pulling developed markets…
Libor rates are trading in very close proximity to risk-free rates, which suggests a minimal credit risk premium in the rate. There is a clear risk that…
This is it! The final year for USD Libor is 2021. No looking back, and many decisions to be made ahead. Complications galore feature. Many loans will have…
We forecast 10Y EUR swap rates to rise to only 0.05% next year, equivalent to -0.25% for 10Y Germany. Inflation is going nowhere fast, ECB demand for…
Money markets will remain under the spell of high excess liquidity levels. This means ever lower Euribor fixings and commercial paper rates. We do not…
Given the shallow rise in EUR interest rates we are forecasting for 2021, we expect curve dynamics to remain equally muted. EUR 2s10s will steepen more…
ECB and EU support, exceeding governments' funding needs in most cases, will continue to drive sovereign spreads tighter in 2021; in the case of Italy…
Supply remains the main driver of swap spreads, but 2021 will be uneventful on this front. Instead, technical factors should cheapen long-dated swap…
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