Rates Weekly: Anew case for US regional banks?

EUR rates:Recap of the week: Euro rates staged a broad rally this week, with the 10Y Bund yield falling back below 2.55% for the first time since June against a backdrop of renewed uncertainty on global trade. Concerns about regional US banks added to the rally. The French OAT again took center stage with 10Y OAT-Bund spread retraced <80bps as the threat of a no-confidence vote faded. Sovereign spreads outside France were broadly stable.Insights of the week: Dutch pension funds, a gradual transition with measured market impact (by Cyril Regnat)Tactical view:  Stress arising around credit exposure on US regional banks’ balance sheet is clearly supporting duration. We do not expect significant EUR curves steepening into year-end. Regarding OAT, the next wave of turmoil is likely to arise at the end of the year.  We should experience a softer market regime and see the 10Y OAT-Bund spread potentially tightening <75 bp.US rates:Yields fell this week driven by the announcement from two US banks about losses in loan holdings. Markets, well attuned to other large bank commentary about potential “where there is smoke there may be fire” as well as the still recent memories of SVB and Signature bank cause a bull steepening flight to quality move in US rates. We are not ready to jump on board this move and are not convinced this is a more systemic problem.