HALISTER1: AUCTION PREVIEW: 10Y BTP Cheap on Curve, 5Y Offers Protection

AUCTION PREVIEW: 10Y BTP Cheap on Curve, 5Y Offers Protection

(Bloomberg) -- Italy to sell 0.35% 11/2021 for EU2.25-2.75b, 1.25% 12/2026 for EU2-2.5b, as well as 7Y CCTeu for EU2.75b-3.25b at 11am CET.
  • Italy 10y yield higher by ~3bps at 1.57%, 2bps wider vs Germany as concession builds ahead of auction; analysts see 10y sector as cheap on curve
  • Mizuho (Antoine Bouvet)
    • Supply has been partly behind BTP underperformance over past few days, though greater beta of Italian bonds in selloffs makes this auction more difficult to absorb
    • Given the volatility, see 5Y sector as preferred by investors wary of further upside in yields; stabilization of spreads ahead of auction would support demand
    • 10y looks cheap in various macro trades such as 5s10s15s and the BTP/SPGB 5s10s, though this is largely a reflection of the issuer underperforming core and Spain, respectively
  • Citi (Aman Bansal)
    • In RV, both 2s10s30s and 12/2024-12/2026-09/2028 fly look cheap
    • See 12/2026-03/2032 steepener as attractive
  • BBVA (Jaime Costero)
    • 5y has traded in line with peers, showing no clear sign of concession ahead of auction
    • 10y issue has richened vs peers since last auction; however, pricing on repo looks normal and trades broadly in line with general collateral rates
    • Cross-market, favor owning 10y BTPs vs SPGBs, and against bunds
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Aman Bansal (Citigroup Inc)
Antoine Bouvet (Mizuho Financial Group Inc)
Jaime Costero (Banco Bilbao Vizcaya Argentaria SA)

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UUID: 7947283

HALISTER1: What Bubble? Buy Junk Bonds, Says $1 Trillion Prudential Arm (1)

What Bubble? Buy Junk Bonds, Says $1 Trillion Prudential Arm (1)

Alert: HALISTER1
Source: BN (Bloomberg News)

Tickers
PRU US (Prudential Financial Inc)

People
Michael Lillard (Prudential Financial Inc)
Alan Greenspan (Greenspan Assoc)
Christopher Flanagan (Bank of America Corp)
Jeffrey Gundlach (Doubleline Capital LP)
Seth Masters (Bernstein Global Wealth Management)

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UUID: 7947283

HALISTER1: ECB’s Coeure Due to Speak in Frankfurt in 5 Minutes

ECB’s Coeure Due to Speak in Frankfurt in 5 Minutes

(Bloomberg) -- Frankfurt: European Central Bank Executive Board Member Benoit Coeure speaks at 4th Frankfurt Conference on Financial Market Policy.
  • Text will be made available on the ECB website
  • See ECB weekly schedule
  • NOTE: Coeure said on Oct. 12 Greece needs clarity on debt to regain market access
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

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UUID: 7947283

HALISTER1: TOPLive Starts: Follow UBS Third-Quarter Earnings in Real Time

TOPLive Starts: Follow UBS Third-Quarter Earnings in Real Time

Alert: HALISTER1
Source: BN (Bloomberg News)

Tickers
UBSG VX (UBS Group AG)

People
Andreas Brun (Mirabaud & Cie Banquiers)
Andreas Venditti (Vontobel Securities AG)
Sergio Ermotti (UBS Asset Management Japan Ltd)

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UUID: 7947283

HALISTER1: INSIDE JAPAN: Bonds Continue Selloff; USD/JPY at 3-Month High

INSIDE JAPAN: Bonds Continue Selloff; USD/JPY at 3-Month High

(Bloomberg) -- Govt bonds decline as global selloff deepens, with yields also rising in U.S. and Europe, and Japanese stocks climbing. USD/JPY at highest since July 29 as U.S. data boost bets of Fed rate increase this year.
  • BOJ bond buying isn’t helicopter money or monetization: BOJ Governor Kuroda
  • JGBs see downward pressure because in addition to rising U.S. Treasury yields, recent risk-off sentiment seems to be turning around, leading to gains in stock prices and weaker yen/stronger dollar, says Naomi Muguruma, a senior market economist at Mitsubishi UFJ Morgan Stanley Securities
    • Super-long sectors remain weak as BOJ officials’ remarks on Oct. 27 probably aimed to halt recent flattening of the curve
  • NOTE: BOJ Governor Kuroda said it wouldn’t be strange for longer-term rates to rise a bit, while Deputy Governor Iwata said doesn’t see need to drive down yields longer than 10 years
  • Yield on 30-year JGB rises 1bp to 0.51%; 40-year up 1.5bp to 0.6%
  • December 10-year govt bond futures approaching key short- term support area near Oct. 24 low at 151.62, below which an extended decline toward 151.48 is possible: charts
  • September core consumer prices -0.5% y/y, matching est.; story here
    • Household spending dropped 2.1% y/y in September vs est. -2.7%
  • USD/JPY up 0.1% to 105.36; intraday high of 105.42
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Naomi Muguruma (Mitsubishi UFJ Financial Group Inc)

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UUID: 7947283