UST 5/30 Flattener Has Legs for Next 6 to 8 Wks, BofAML Says
Source: BFW (Bloomberg First Word)
People
Shyam Rajan (Bank of America Corp)
To de-activate this alert, click here
UUID: 7947283
(Bloomberg) -- 5/30 curve steepening unleashed today by weak May jobs report has limited scope to continue because “intermediate forwards don’t have enough juice to decline significantly if risk assets correct or global yields decline,” BofAML strategist Shyam Rajan says in note.
Alert: HALISTER1- Compared with Aug. 2015 and Jan. 2016, periods when 5/30 curve steepened, forwards from 2y1y to 4y1y are 70bp-100bp lower
- Unless market prices in rate cuts, forwards have limited scope to decline, and curve would probably bull flatten before pricing in higher rate-cut probabilities
- BofAML recommends 3y fwd 2s10s flatteners (49bp), expects 5s30s steepening to stall beyond 130bp
Source: BFW (Bloomberg First Word)
People
Shyam Rajan (Bank of America Corp)
To de-activate this alert, click here
UUID: 7947283