November 15, 2024 (NO COMMENTS)

Bonds issued by the European Commission are increasingly being used as proxy hedges to European government bonds rather than using traditional euro interest rate swaps, with correlations shifting thanks to quantitative tightening and liquidity improvements in EU debt. Traders say the moves have been driven by falling premiums on Bunds as the European Central Bank (ECB) unwinds its bond buying programme, and increased secondary market liquidity for EU bonds.