The 5Y point is the pivotal point on the EUR curve. This is right after the textbook and the normal pattern we see when monetary policy is about to change in either direction.
It has resulted in a steepening of the 2y5y curve and a simultaneous flattening of the 5y10y curve. The 'butterfly' 2y5y10y has flattened.
The curve has also flattened 10y30y, reflecting that long rates are already trading close to what is considered the 'neutral rate' in the eurozone. A curve dynamic close to the curve dynamics seen in the US since 2013.
During 2018, we continue to see an extension of the recent flattening of the EUR curve. Both the 5y10y and 1030y curve are expected to continue flattening.
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