sentix ASR Essentials 31-2017

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Inflation expectations still benefitting bunds

Investor pessimism on Bunds has receded in the past couple of weeks, while survey respondents are also becoming less negative on Bunds from a medium-term strategic perspective, with survey readings much less downbeat than they were at the start of this year (see Chart 9, page 4). Monthly questions on bond ‘themes’, suggest investors view inflation as a much less Eurozone bond-bearish theme than it was coming into 2017. In contrast, economics is still seen as a notably bearish theme for bonds. While inflation expectations appear to be continuing to win out over bond concerns over economics as a theme, it may still leave bunds at risk from any signs that inflation is not as benign as believed. See Page 2 for charts.

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