HALISTER1: UST 10Y Yield to Break 2.50% on Trump, End 2017 at 2.25%: BMO

UST 10Y Yield to Break 2.50% on Trump, End 2017 at 2.25%: BMO

(Bloomberg) -- Selloff will continue to lead UST 10Y yield to a sustained break through 2.50% on hopes of “Trumponomics” boosting economy; UST 30Y yield to test 3.35-3.40% range before ending 2017 closer to 3%, BMO strategists Ian Lyngen and Aaron Kohli write in 2017 outlook.
  • Market to refocus on under-employment, impacts of USD strength and potential for technical recession toward end-2017 as “post-fiscal euphoria” subsides
  • Risks to forecast include higher inflation from Trump trade war or softer stance on immigration, either would push yields up in short-term but weigh on medium-term growth
    • This would subsequently “put the brakes” on real economy and drive yields lower, but not until 2018
    • Other risks to USTs include higher issuance amid uncertain foreign demand, FOMC policy bias, European elections, aging demographics in U.S., corporate profitability, energy borrowing
  • “We’re arguably moving away from a market best characterized as offering long spells of mind-numbing boredom punctuated by monuments of sheer panic.”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Aaron Kohli (Bank of Montreal)
Ian Lyngen (Bank of Montreal)

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UUID: 7947283

HALISTER1: DBRS: TD's Q4 2016 Results Relatively Stable

DBRS: TD's Q4 2016 Results Relatively Stable

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
TD CN (Toronto-Dominion Bank/The)

People
Michael Driscoll (DBRS Inc)

Topics
Credit Analysis Research
Credit Research
Earnings Review Research
Fixed Income Research
Investment Research

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UUID: 7947283

HALISTER1: Sell UST 10Y TIPS on Breakeven, Citi Says

Sell UST 10Y TIPS on Breakeven, Citi Says

(Bloomberg) -- Increase in longer-term inflation expectations since U.S. election day “is justified given that the fiscal outlook has changed,” though risk-reward now favors shorting long-end breakevens, Citi strategist Jabaz Mathai says in note.
  • Citi recommends selling 10Y breakeven at 198.6bp, targeting 175bp, with stop at 210bp
  • Factors that should continue to limit inflation include labor substitution, USD strength, commodity prices and subdued wage growth
  • Risks to recommendation would be “mostly policy driven,” including move toward trade tariffs or an infrastructure spending plan in 2017
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jabaz Mathai (Citigroup Inc)

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UUID: 7947283

HALISTER1: Wait Until UST 10Y/Bund Spread Nears 250bp Before Fading: TD

Wait Until UST 10Y/Bund Spread Nears 250bp Before Fading: TD

(Bloomberg) -- Even though UST 10Y/bund spread has widened to historical levels, wait until it nears 250bp before fading, as Treasury rates have room to “reprice higher” and the Italian referendum may support bunds, TD strategists Priya Misra and Renuka Fernandez say in note.
  • Recent rise in UST yields driven by optimism about Trump’s fiscal policies and greater Treasury supply; 10Y yield may peak around 2.75% in next few months
  • Concern about Italian referendum and European politics have kept bunds bid
  • Dec. 8 ECB meeting also poses a risk, as recent bond selloff has complicated the “exact timing” of a tapering decision
  • If the ECB hints at tapering next week, or if the French and Dutch elections turn out to be a non-event, some of the “flight-to-quality premiums” for bunds should wane
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Priya Misra (TD Securities USA LLC)
Renuka Fernandez (Toronto-Dominion Bank/The)

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UUID: 7947283

HALISTER1: Petrobras ‘Carwash’ Probe Said to Bring $2.5 Billion Bribe Fine

Petrobras ‘Carwash’ Probe Said to Bring $2.5 Billion Bribe Fine

Alert: HALISTER1
Source: BN (Bloomberg News)

Tickers
PETR4 BZ (Petroleo Brasileiro SA)
BRKM5 BZ (Braskem SA)
ODBE4 BZ (Odebrecht SA)

People
Judith Burns (US Securities & Exchange Commission/Washington DC)
Luiz Inacio Da Silva (Federative Republic of Brazil)
Marcelo Odebrecht (Odebrecht SA)

Topics
Criminal Practice & Procedure

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UUID: 7947283

HALISTER1: TPCG Favors Uruguay USD Bonds on Mild FX Weakness Outlook

TPCG Favors Uruguay USD Bonds on Mild FX Weakness Outlook

(Bloomberg) -- TPCG Group prefers 2024, 2027 global USD bonds, economist Adolfo Kopouchian wrote in a note to clients.
  • Investors should also track Uruguay’s global CPI-linked bonds
  • Current yield to maturity on global CPI-linked bonds could in medium term offer attractive entry level
  • TPCG doesn’t expect any dramatic movements in valuations of CPI-linkers thanks to supportive local demand
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283

HALISTER1: Brazil Needs to Continue With Reforms to Calm Investors: CA

Brazil Needs to Continue With Reforms to Calm Investors: CA

(Bloomberg) -- Only the approval of the pension regime reform will calm investors amid political instability in Brazil, Vladimir Caramaschi, strategist at CA Indosuez, says in a phone interview.
  • Approval of spending cap bill is not enough; social security changes are crucial to fix the budget
  • NOTE: President Temer pledged to send pension regime bill to Congress next week
  • Market uncertainty will only mute when it’s clear that the reform agenda won’t be derailed by political troubles
  • Criticism of Meirelles-led economic team reported by local press is unlikely to result in cabinet change
    • “After everything Temer has spoken and done so far, it is impossible that he has no conscience that changing the economic team would damage his government”
  • Clash between legislators and prosecutors, next Sunday’s protests also concerning
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Henrique Meirelles (Brazil Secretaria do Tesouro National)
Michel Temer (Federative Republic of Brazil)
Vladimir Caramaschi (Credit Agricole Brasil SA DTVM/Brazil)

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HALISTER1: Maritime Link Financing Trust - DBRS Rating Report

Maritime Link Financing Trust - DBRS Rating Report

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
EMA CN (Emera Inc)

People
Biao Gong (DBRS Inc)
Ravikanth Rai (DBRS Inc)

Topics
Credit Analysis Research
Credit Research
Fixed Income Research
Investment Research
Issuer Focused Research

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UUID: 7947283