New yield forecast Greece still putting a lid on German yields

Greek woes still keep a lid on German yields despite increasing risk appetite and a better outlook for indicators in coming quarters.Short rates have range traded over the past month and the 2Y-10Y curve has remained unchanged. Going forward, we expect the curve to flatten.The first ECB rate hike will probably occur in Q1 2011, though the market is not discounting the first hike till Q3 11.We expect the Danish central bank to deliver another CD rate cut within the next month.The US recovery is leading the eurozone so the Fed will act before the ECB. We expect a first US hike in November 2010.Yields should rise on both sides of the Atlantic in 2010.Next yield forecast due 14 May 2010