Halister News

Economic Release Details: {USHBMIDX Index ECOD} --VINCE GOLLE

(Bloomberg) -- Estimate based on the possibility that there may be “some upside left,” Citi strategist Steve Kang said in note.

• Japanese, Canadian, French banks continue taking the largest share of CDs/CP from U.S. money market funds, and could “bring up CP/CD rates (and by extension Libor)” going forward
  • Issuing CP/CD still cheaper “by a big margin” compared to other funding options
  • Japanese banks responsible for 19% of CP/CD issuance, Canadian banks 16%, French banks 14%

Economic Release Details: {EMPRGBCI Index ECOD} --VINCE GOLLE

(Bloomberg) -- While outright views on duration remain mixed, strategists favor outperformance of 5Y sector given dovish Fed outlook from front-end funding pressure, sector sensitivity to weaker data and positive carry.

• “Curve to steepen as a result of a dovish Fed,” writes BMO strategist Aaron Kohli
  • Funding pressures, ample positive carry and likelihood Fed won’t hike in Dec. favors belly vs 10Y, 30Y
• 5Y “stands out as an attractive point on the curve once again,” writes FTN strategist Jim Vogel
  • Trend spawned by soft retail sales could lower 5Y yield by as much as 7bp over 3Q
  • Recent back-up to 1.10% is mostly due to oil-led inflationary pressure
• “We are still biased in favor of a break to higher yields,” writes JPM technical strategist Jay Barry
  • Front-end and intermediates close to fair value; medium- term OIS rates too low given Fed outlook
  • Curve is ~10bp too flat after refunding supply; maintain tactical 5s30s steepeners
• Given fragile outlook and global central bank easing policy, path of least resistance remains to lower yields, writes RBS strategist John Briggs
  • USTs headed toward lower end of summer yield range
  • Low-end of 10Y range at 1.30%, level expected to be reached into November elections, or “sooner rather than later” given weaker domestic and global data
• “Technical landscape is edging toward more bullish,” independent strategists David Ader and Ian Lyngen write
  • Sideways grind expected; process of defining lower end of range continues
  • Hedging needs over corporate issuance may influence UST direction in near-term

(Bloomberg) -- Empire State Mfg Survey seen at 2 in July vs 0.55 in June (forecast range -1.6 to 5); tracks sentiment among manufacturers in New York Fed district.

(Bloomberg) -- Xylem sees deal accretive to 2017 adj. EPS; XYL reaffirms 2016 views.

• Sees deal closing in 4Q

Statement: NSN OBY6GOMEQTXC