Commodities | Global | Rates | US
Russia Conflict Brings Steepeners Into Play
By Bilal Hafeez and Caroline Grady
(4 min read)
Summary
• Rates markets have responded differently to the action stage (invasion) of the Russia/Ukraine conflict than to the reaction stage (sanctions).
• However, in both stages, the curve has steepened beyond the 5y part of the curve.
• Meanwhile, oil shocks typically see steeper curves. We therefore expect USD/EUR 5s30s curves to steepen over the medium term.
• In EM, we focus on CE-3 rates and expect 2s10s steepening.
Summary
• Rates markets have responded differently to the action stage (invasion) of the Russia/Ukraine conflict than to the reaction stage (sanctions).
• However, in both stages, the curve has steepened beyond the 5y part of the curve.
• Meanwhile, oil shocks typically see steeper curves. We therefore expect USD/EUR 5s30s curves to steepen over the medium term.
• In EM, we focus on CE-3 rates and expect 2s10s steepening.
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