 ECB has become more hawkish: With central banks in the US, the UK and Canada  having started to hike rates, the ECB has also turned more hawkish. Net purchases under  PEPP ended in March 2022 and the net purchases under CBPP3 will end by 1 July 2022,  paving the way for the first rate hike in July.

 Strong covered bond supply in H1 2022: Despite high market volatility, rising yields and  geopolitical tensions, primary market activity in covered bonds has been surprisingly strong in  the first half of the year. At EUR115.5bn, it already exceeds the full-year volumes of the last two  years. We expect EUR160-180bn of EUR covered bond issuance in 2022, which indicates a  slowdown in primary market activity in the second half of the year. Moreover, issuance of GBP  and particularly USD denominated covered bonds has also been very strong.