Euro swaps trading was turbulent throughout the week, with poor economic data in the US leading to an initial widening of spreads on Mondy. But, by Thursday, swap rates had fallen back to earlier levels. Dealers were pre-positioning themselves ahead of heavy bond issuance due next week.
“We expect the market to rally next week,” said Christophe Coutte, director of euro swaps at Deutsche Bank. “Funding is currently attractive, with rates relatively cheap.”
Ten-year swap spreads ended the week slightly up at 22.5bp.