The ECB cut rates by 25bp as well as the deposit rate, and the BoE conducted 50Bln Sterling more QE as was the expectations which led to a 150 pip sell of in the Euro, and a big drop in the Euribor spreads, as the curve flattened further.
Jun13Sep13 went from trading 3s pre announcement to trading 1.5s at the end of the day, the same was try across the curve.
I was short 7s Dec13Mar14 took a half, to then see it go further down and we are now trading 5.5s.
It was a tough day to be going long as there wasn't much pullback. This morning we seem to be consolidating around these level, and I took the opportunity to go long selected spreads, and waiting for some type of pull back which I expect.
The Bund has started to go back towards highs as we have moved up 100 points since the rate announcement yesterday. This was apart of the broader flattening as the 2s 10s spread also flattened as you would expect.
Today we look forward to Non Farm Payrolls and a further disappointment could lead to further flattening as safe haven buying would most likely be the play of the day.
Although if that is the scenario, we could later rally in stocks, as it adds to the probability of more Stimulus out of the FED.
This afternoon should be interesting!
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