week #11 - 2026

Good evening folks, market has been wild these days and I really hope you made it through.

Markets have been quite crazy. In EUR Rates we went as far as pricing two hikes from the ECB this year due to the jump in oil and gas prices. Spreads overall widened vs Bunds and the curve flattened big time. We also saw the UK moving from cuts to hikes: wild. With that said, I generally don’t have a view on the war. I simply think that it will last for some time and even if oil prices come down there will be some premium left on top to account for a potential escalation in the Middle East. Still, the trades I’ve been looking at are three:

1. Fade the ERZ6 pricing as I don’t think the ECB is in a position to hike (not even once to be honest). When we went to pricing 50bps, I chatted with some friends and we all agreed that the move was yes related to energy prices but at the same time was a decent location to look for some carry.