Halister News

Economic Release Details: {SWRRATEI Index ECOD} --NIKLAS MAGNUSSON

(Bloomberg) -- HSBC revises target for 10-year Sri Lanka govt bonds to 9% from 10% and maintains its recommendation to stay long, strategists Andre de Silva and Himanshu Malik write in note Thursday.

• Co. has turned more bullish on Sri Lankan local rates with inflation for rest of 2017 likely to remain within targets prescribed by IMF
• Govt’s continued efforts toward fiscal consolidation help central bank in its transition toward an inflation targeting regime
• Central bank may pivot toward an easing cycle in early 2018 if credit growth moderates to around 15%, a level viewed as neutral level by both central bank and IMF
• Recommends holding June 2027 govt bonds to target yield at 9%
• NOTE: Yield was 10.7% at the last trade on Monday

To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Masaki Kondo

Economic Release Details: {MAOPRATE Index ECOD} --SHAMIM ADAM

(Bloomberg) -- Bund futures (RX1) technical levels in focus.

• Daily Trend Bias: Cautiously Bearish
• Comment: Marked slowdown in momentum with MACD on bearish crossover watch on Thursday; top heavy price activity occurs right against range extremes (162.69-163.10); U.S. debt ceiling deal on Wed. lifted UST 10y yield from important 2.05% level, sparking bund selloff
  • Resistance: 162.46; 162.68; 162.93; 163.06-10; 163.21
  • Support: 162.00-161.96; 161.86; 161.72-66; 161.50
• NOTE: Roll-adjusted by difference in GFUT
• NOTE: Sejul Gokal is a FICC technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

To contact the reporter on this story: Sejul Gokal in London at sgokal1@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Scott Hamilton

(Bloomberg) -- Sell New Zealand’s May 2021 bonds and buy similar-maturity Australian debt as the spread between the two will widen, according to Commonwealth Bank of Australia.

• Investors should enter the position with the gap at +5bps, and target +25bps, which matches the current cash-rate differential, rate strategists Jarrod Kerr and Kevin Xie write in note Thursday
• A stop should be placed at 0bp
• RBNZ cash rate likely to remain 25bps above RBA’s for foreseeable future
• Possible to see a temporary widening in New Zealand’s bond spread versus Australian debt and Treasuries on a change in N.Z. govt
• NOTE: Nation will hold general election Sept. 23
• Political angle isn’t “high conviction call” because history suggests markets are relatively immune to political changes from center right to center left
• NOTE: Spread between New Zealand and Australia’s 2021 bonds shrunk to 3bps Thursday, narrowest since May 2013, from as much as 64bps on Feb. 1

To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Nicholas Reynolds

(Bloomberg) -- If the WSJ report that U.S. President Trump won’t be nominating White House economic advisor Gary Cohn to succeed Janet Yellen is true, the market may reprice the risks around the Fed succession in a less dovish and more hawkish direction, writes Krishna Guha Vice Chairman at Evercore ISI in note.

• Cohn is perceived by investors as a market-friend candidate with dovish lean on interest rates
• Sees chances of Cohn’s appointment at 15%
  • Doesn’t think the chances will fall to zero as Cohn might still win back Trump’s favor especially if he achieves a breakthrough on tax reform
• To the extent that he is now less likely to succeed Yellen, the risk skew around the reappointment does shift a bit less dovish, more hawkish direction
• Most of the names cited in the WSJ report — Lindsey, Warsh, Taylor — have a relatively traditional Republican / hawkish flavor
• In the final analysis Trump will end up picking someone who is not a hawk, reflecting his own preferences for low rates and a weak dollar
  • Hubbard, Powell, Kaplan and Dudley among others warrant ongoing attention in this regard
• NOTE: Wall Street Journal tweeted Trump is unlikely to nominate Gary Cohn to become Federal Reserve Chair

To contact the reporter on this story: Michael G. Wilson in Sydney at mwilson176@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui