Halister News

(Bloomberg) -- Positives for $13b new issue auction at 1pm ET include rebound in real yields from YTD lows reached in early July, breakeven rate about 20bp below YTD high and positive inflation trends; negatives include WI yield below 10Y TIPS auction stops since May 2013 and elevated primary dealer positioning.

• Barclays (Michael Pond)
  • Sector “looks cheap,” with real yield back above 0% and breakevens near 1.50%
  • Aided by reduced auction size and 0.11yr index extension, low breakevens, esp. vs equities, should draw structural value buyers
  • Headwinds include low real yields, elevated primary dealer positions, and Fed that “appears unconcerned about global disinflationary pressures and low wage growth”

• BMO (Aaron Kohli)
  • Likely to see a “slightly larger” tail than May’s 0.5bp for 10Y TIPS reopening, as recent drop in real yields means there’s “no urgency to buy”; 1bp-2bp tail would be a “fair outcome for the duration-heavy” product
  • Positives for the sale include improving CPI trend, “decent” flows into TIPS funds, 0.12yr month-end extension and reduced size (vs $15b in Jan.)
  • Negatives include elevated primary dealer positions, low real yields, soft foreign demand in last few auctions and falling gasoline prices

• Nomura (unsigned)
  • Positives for auction include supportive inflation data and recent gains for risk assets globally
  • Negatives include “suppressed” real yield levels and USD appreciation that curbs import inflation
  • Neutral stance into supply, expecting a “healthy takedown”

(Bloomberg) -- Humana sees FY2016 adj EPS at least $9.25, saw at least $8.85 in May, est. $8.87

• Shares halted
• NOTE: Earlier, Aetna, Humana to ’Vigorously’ Defend Merger in Response to Suit Link

Statement Link

--SARA FORDEN