The spread between UST and German bund re-started widening since late last month as market players got the dovish stance of ECB or Draghi. Some IBs, for example GS, argues 10 year spread could widen to 190bps from current 160bps. If then, my position in the portfolio should lose...
As I believe ECB hardly can do action really, I will maintain my position. But, I recognize the risk is bigger than before. Because this spread moves on the monetary policy divergence, this is in line with EUR/USD fx rate as well. Why I consider the risk is that EUR/USD seems to have new momentum toward downside in a technical analysis.
So, when I react this risk, I have to short EUR against USD rather than exchange bond position.
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