Buy SPGB 0% 01/27 vs. sell SPGB 0.50% 01/28: current level -10bp; target -16bp (stop loss -8bp).
In our view, the 5Y area of the SPGB curve is trading relatively cheap vs. other sectors, fuelling the flattening of longer references relative to this area
From a fundamental point of view, the latest ECB meeting (and its hawkish bias) added pressure to the short areas of the curves resulting in a flattening of the slope. However, looking ahead, we believe that it is hard to see a “more hawkish” ECB than the one seen at the last meeting, which could lead to slope steepening