Post-BoJ German 2 year yield drops to lowest ever

Market is more certain after today's actions from Bank of Japan (BOJ), which reduced rates by 20 basis points to -0.1%, that European Central Bank (ECB) to be next in line in terms of easing. So 2016, is going to be another year of more stimulus, which would outweigh US Federal Reserve's rate hike policy.

German 2 year yield has now fallen to -0.48%. In 2016 alone, German 2 yield has dropped 27 basis points, record for a start of the year. Today it is being fuelled by expectations for further stimulus, while risk aversion has been major driver for the year. French 2 year yield has dropped to -0.4%.

European Central Bank (ECB) president Draghi indicated that board of Governors, would be reevaluating monetary policy in March and probably will adjust it.

Well known hawk, German Bundesbank president Jens Weidmann will not have voting right in March. In recent comments, while warning against monetary financing, said, downside risks to inflation has increased and ECB would need to revise down its inflation forecast significantly.

After BOJ surprise, focus is more on ECB to surprise.

Euro is currently trading at 1.09 against Dollar.