HALISTER1: 1.75% ‘Seems to Be the New Normal’ for USD 10Y Rate: Citi

1.75% ‘Seems to Be the New Normal’ for USD 10Y Rate: Citi

(Bloomberg) -- Expect recent stability in long-end rates to persist, as potential for “slowing growth and strong fund flows” into USTs will mitigate any near-term sell offs, Citi strategists led by Jabaz Mathai say in April 15 note.
  • “We think that broadly speaking, the 1.50% to 2% range encapsulate most trading activity over the next few months, and the 1.75% strike on the 10y should exert a strong centripetal force on trading activity”; it has closed more than 5bp away on just one day this month
  • Front-end now prices in just one hike by mid-2017, is vulnerable to a repricing; continue to recommend hedging potential for rate moves to be priced back into curve by owning EDZ6 99.00/98.75 put spreads
  • Core duration trades unchanged: long 5y real yields, long US duration vs Europe through 5Y5Y, call spreads on the long bond
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jabaz Mathai (Citigroup Inc)

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UUID: 7947283

HALISTER: TigerRisk Hires Kusche for Catastrophe Deals in Wall Street Push

TigerRisk Hires Kusche for Catastrophe Deals in Wall Street Push

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
BAC US (Bank of America Corp)
SREN VX (Swiss Re AG)
0891359D US (TigerRisk Partners LLC)
WLTW US (Willis Towers Watson PLC)
MMC US (Marsh & McLennan Cos Inc)

People
Philipp Kusche (TigerRisk Partners LLC)
Tony Ursano (TigerRisk Partners LLC)

Topics
Management Changes

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UUID: 7947283

HALISTER1: Sell 10Y Bunds vs 5Y Treasuries, Hold UST 5s30s Steepeners: MS

Sell 10Y Bunds vs 5Y Treasuries, Hold UST 5s30s Steepeners: MS

(Bloomberg) -- Recommend investors sell 10Y bunds vs buying 5Y USTs to reflect more bearish duration bias on bunds than USTs, and curve steepener bias in USTs, Morgan Stanley strategists including Matthew Hornbach write in a client note.
  • Recommend long FVM6 futures vs RXM6 futures at 114bps
  • Bond market indicators have shifted to bearish as positive bond market momentum has dissipated; yet to embrace short bias given risks around WTI Crude, ECB, Fed, BoJ meetings in coming weeks
  • Maintain recommendation to scale into USTs 5s30s steepeners due to Fed’s increased focus on global economic outlook
  • Recommend selling 5Y TIPS roll, trades ~8bps rich to fair- value estimates; post-auction recommend buying 04/2020 or 04/2021 breakevens for positive carry season
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
MS US (Morgan Stanley)

People
Matthew Hornbach (Morgan Stanley)

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UUID: 7947283

HALISTER1: UST MORNING CALL: Crude in Focus; Market Lacking Direction

UST MORNING CALL: Crude in Focus; Market Lacking Direction

(Bloomberg) -- Early risk-off rally in USTs has evaporated as WTI crude pares initial losses that followed Doha talks.
  • Watch energy declines closely; falling prices for spot WTI crude should have limited impact on 5Y5Y inflation swaps, though these lvls are important for the Fed, RBS’s John Briggs writes in a client note
  • CFTC data as of April 12 show $13.6b drop in Specs net short positions, having amassed largest shorts since Jan.; largest drop in TY (-$8.2b), asset managers continued to reduce TY (-$4b), WN (-$10b) positions, Nomura’s George Goncalves writes in client note
  • Treasury market lacks direction, positioning surveys show bias toward neutral duration; little market response to releases that were once market moving events, CRT’s David Ader and Ian Lyngen write in client note
    • Impact of key macroeconomic data has decreased meaningfully over recent months, writes BofAML in client note: MORE
  • NOTE: UST 5s30s Flattening Dynamics Supported in Risk-Off: Charts
  • 10Y note-futures technicals (roll-adjusted):
  • Resistance 130-28 (61.8% Fibo of April 7-14 fall), 131-01 (76.4% Fibo), 131-07 (April 11 high)
  • Support 130-15 (April 15 mid price), 130-06 (April 14 low)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
John Briggs (RBS Securities Inc)
David Ader (CRT Capital Group LLC)
George Goncalves (Nomura Holdings Inc)
Ian Lyngen (CRT Capital Group LLC)

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UUID: 7947283