Bund Curve Flattens, Euro Jumps On Report ECB Considering "Twist-Like" Operation

To address this, the ECB's enhanced guidance should give an indication of ECB thinking as to how it could respond to events over a one to two-year horizon, MNI notes.

In kneejerk response to the MNI report, bund futures promptly trimmed declines, with the 10Y yield dropping to session lows below 0.51%, while Germany 5s30s curve flattened 2bps to the narrowest in almost 2 years.

The news also helped the euro hold above a key pivot area, with the EURUSD matching earlier gains in the pound after European Council President Donald Tusk said the EU is serious about getting a Brexit deal, though he rebuked U.K. Foreign Secretary Jeremy Hunt for likening the EU to the Soviet Union.

Whether this renewed attempt to flatten the yield curve and push long-dated yields lower will succeed will ultimately depend on what happens with US Treasurys, where - for now at least - the furious selloff of the past 24 hours appears to have stabilized for the time being.

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