U.K. Rates May Fall as Much as 20bps on a BOJ Surprise: TD Secs
(Bloomberg) -- Expect U.K. rates to move lower if the BOJ surprises again on Thursday but a return to Feb. lows is unlikely given lower Brexit premia, TD Secs analyst Renuka Fernandez writes in client note.
- BOE saying it’s less sensitive to data ahead of the June vote on EU membership may also limit drop in rates
- Market now expects BOE to raise rates 28.5 months from now; a BOJ rate cut or other measures may see it pushed back to at least 30 months
- Yields may fall as much as 10bps to 15bps on the short end and 15bps to 20bps on the longer end; unlikely 2Y gilt yields would stay below 34bps level for any considerable length of time
- Keeps short 2Y gilt position, targeting 59bps and Dec 16/Dec 17 short sterling steepeners, targeting 48bps
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HALISTER1Source: BFW (Bloomberg First Word)
People Renuka Fernandez (Toronto-Dominion Bank/The)
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