Analysts at Danske Bank note that the oil price is under pressure not only from the ‘trade war’ between China and the US, but also from the expected increase in oil supply from OPEC although it is likely to be modest as OPEC has announced a proposal for a modest increase in the supply.
Key Quotes
“There are plenty of factors supporting the bond market at the moment and 10Y US Treasuries fell below 2.90% yesterday. On top of the overall positive sentiment in the bond market we are seeing spreads between the EU peripheral government bonds and core-EU continue to grind tighter as there is limited news on the Italian future fiscal policy.”
“The comments from the new Italian finance minister as well as the ECB meeting last week has been very supportive for Italian government bonds. We think that the markets are a bit complacent as we still need to see more evidence that Italy is committed to follow EU budget lines, but the risk is that we will not get more firm information before the autumn. In the meantime spreads continue to tighten.”
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