As rate hikes look imminent, front month euribors spreads are storming higher as back month spreads falls traders bet on interest rates. Recent positive news have put pressure on Bonds as risk appetite grows.
Mar10-Jun10 rose from a low of 33 on Friday to 38 in the afternoon, where as Jun11-Sep11 spread fell from 18.5s to 17s in the afternoon.
Looking forward it looks like this trend is likely to continue, and I favour being long on pullbacks on the front end and short the back end,unless new news dictates otherwise.
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