HALISTER1: Sell GBP 5y5y Swaption Straddles vs EUR, USD: Societe Generale

Sell GBP 5y5y Swaption Straddles vs EUR, USD: Societe Generale

(Bloomberg) -- Idiosyncratic premium on GBP rates volatility no longer justified, Societe Generale strategist Adam Kurpiel writes in client note.
  • More than ever, central banks are set to keep rates low for longer, which implies potential for the convergence of both GBP and USD rates volatility toward lower EUR rates vol
  • Sell GBP 5y5y vol vs EUR and USD, vega and FX-weighted
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Adam Kurpiel (Societe Generale SA)

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UUID: 7947283

HALISTER1: Refiners Estimates Cut; PSX Downgraded on Outlook: Wells Fargo

Refiners Estimates Cut; PSX Downgraded on Outlook: Wells Fargo

(Bloomberg) -- Expectations for 2Q refiner results have been “significantly slashed” vs earlier this year; most refining equities delivered “very disappointing” performances, writes Wells Fargo analyst Roger Read.
  • Reduces 3Q and 4Q 2016, 2017 EPS ests. for ALJ, DK, HFC, MPC, PBF, PSX, TSO, VLO
  • Increases ests. for WNR, citing complete ownership of NTI
  • Expects increased discussions and speculation about “economic run cuts” being necessary component to re- balancing refined product markets
  • Downgrades PSX to market perform from outperform based on “stock’s resilience versus the group as well as a shakier outlook for its refining operations"; lowers valuation range to $75-$82 from $89-$94
  • Maintains outperform ratings for MPC, PBF and VLO; believes earnings and cash flows can recover from 2016’s trough to more of a mid-cycle level
  • NOTES: July 6, Refiners Underperform on Gasoline Cracks Decline, Output Cuts; East Coast Run Cuts; Import Cargo Flow Falls
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
ALJ US (Alon USA Energy Inc)
DK US (Delek US Holdings Inc)
HFC US (HollyFrontier Corp)
MPC US (Marathon Petroleum Corp)
PBF US (PBF Energy Inc)

People
Roger Read (Wells Fargo & Co)

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UUID: 7947283

HALISTER1: U.S. ECO PREVIEW: Employment Report Due in 5 Minutes

U.S. ECO PREVIEW: Employment Report Due in 5 Minutes

(Bloomberg) -- Non-farm payrolls seen at +180k in June vs +38k in May (forecast range +50k to +243k); May increase was smallest since Sept. 2010.
  • “Modest rebound in-line with a three-month moving average to just above 100k will not persuade the Fed to deliver the next rate hike": Bloomberg Intelligence
  • Unemployment rate seen at 4.8% last month vs 4.7% prior month (forecast range 4.7% to 4.9%); tracks number of unemployed as percentage of labor force; May unemployment lowest since Nov. 2007
  • Average hourly earnings est. +0.2% m/m in June, same as May (forecast range +0.1% to +0.3%)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Topics
First Word Agriculture

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UUID: 7947283

HALISTER1: UST MORNING CALL: Focus on Payrolls, Risks Asymmetric: BofAML

UST MORNING CALL: Focus on Payrolls, Risks Asymmetric: BofAML

(Bloomberg) -- Focus on payroll data, set-up has been via buying downside in eurodollar options; risks asymmetric, would take a strong beat to move Fed expectations, BofAML analysts write in a client note.
  • Some evidence of bearish technical set-up in USTs, “great importance” on payrolls, as 10Y needs convincing break through support at 1.42% to confirm a short-term trend reversal is unfolding, JPMorgan says in client note
  • Setting-up of shorts in the front-end via options by fast money investors motivated by potential for pricing of further near-term Fed tightening after a solid jobs report, Morgan Stanley says in client note
    • Not seeing much likelihood of long-end rates moving up sustainably given large duration needs globally: MS
  • BNP analysts write in client note that they turn short-term neutral on the longer end of the curve, after reaching 1.40% target, look to re-initiate longs at more favorable levels
  • Technicals:
    • Resistance: 134-07+ (July 6 high), 134-27 (pivot r3)
    • Support: 133-11 (July 7 low); 133-00 (July 5 low); 132-14 (June 30 low)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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UUID: 7947283