Bund 5Y-30Y steepener

Recent positive developments in the US labor market and the rise in geopolitical risks are influencing EGBs . ECB rate cut expectations have been reduced by 3 0 bp to a projected terminal rate of 2.0%. Concerns about the ECB potentially undershooting the neutral rate may re-emerge, particularly as the Eurozone's October HICP is expected to stay below 2.0%. This environment suggests a steepening of the yield curve, especially in the lagging 5Y-30Y sector. Our forecasts indicate the 5Y-30Y Bund could reach 60 bp by year-end, leading to a recommendation for a long position in BOBL 10/29 vs. short Bund 08/54 (entry: 4 1 bp; target: 60bp; stop-loss: 30bp).