Halister News

(Bloomberg) -- Fed unwinding balance-sheet investments is likely to increase term premium at long end of UST curve by 35bp-50bp and widen MBS by 15bp-20bp; IG credit spreads “may initially widen at a faster pace than MBS as credit is at risk of changes in fund flows,” Nomura strategists led by George Goncalves write in Aug. 17 note.

• “The market’s benign assumption of a smooth and boring conclusion of the unwind is too rosy”
• Note examines supply/demand dynamics for USTs, MBS and credit of banks, foreign investors and domestic money managers
• Banks are unlikely to absorb majority of Fed’s portfolio runoff because their securities holdings “tend to grow only when there is excess deposit above and beyond the needs of the loan book”
• Overseas investors -- official and private -- are likely to favor front-end “even more than usual” because of duration concerns, leading to a steeper curve
• Domestic money managers are “least likely to make more UST purchases” because of preference for higher yields
• Viewed by asset class, USTs require most sponsorship from overseas investors, MBS and credit will depend most on domestic money managers

To contact the reporter on this story: Anna Windemuth in New York at awindemuth1@bloomberg.net To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net Elizabeth Stanton

(Bloomberg) -- Treasury futures (TY1) technical levels in focus for Thursday.

• Daily Trend Bias: Bullish
• Comment: Staging topside breakout, clearing the important 126-28/126-29 hurdle area; year-to-date high in focus at 127-08
  • Resistance: 127-02; 127-05; 127-08
  • Support: 126-21 (pivot); 126-18+; 126-11
• 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 Anil Varma

(Bloomberg) -- Following are forecasts for today’s economic releases as compiled by Bloomberg News.

• U. Mich Conf 94; range 92 to 97 (57 estimates)
• U. Mich Curr 112.9; range 112.8 to 114 (3 estimates)
• U. Mich Exp 81.5; range 81.3 to 84 (3 estimates)
• "Consumer sentiment has fallen from the 13-year highs registered in January, and currently resides at its lowest level since prior to the election in October. Clearly much of this erosion is a function of policy inaction by the government”: Bloomberg Intelligence
• In July, the index dropped to 93.4 from June’s reading of 95.1; it peaked this year at 98.5 in January

To contact the reporters on this story: Chris Middleton in Washington at cmiddleton2@bloomberg.net; Vincent Del Giudice in Denver at vdelgiudice@bloomberg.net To contact the editors responsible for this story: Alex Tanzi at atanzi@bloomberg.net Kristy Scheuble

(Bloomberg) -- Canada’s consumer price index seen rising 1.2% y/y in July after increasing 1% in June (forecast range 1% to 1.3%).

• June increase was smallest since October 2015

Economic Release Details: {CLGDPNA% Index ECOD} --PHILIP SANDERS