Halister News

(Bloomberg) -- Structural forces favor low euro-zone inflation and bond yields, BNP Paribas strategists including Eric Oynoyan write in client note.

• Latest ECB announcements increased the 2016 net negative EGB supply by potentially EU50b
• TLTRO II is very supportive for the banking sector and favors tighter spreads vs swap
• Long duration on 10Y bund targeting -20bp and 10Y OATs targeting 10/15bp by year-end
• Renewed flatter curve up to 10y bund, 15y on OAT with unchanged depo and increased buying from PSPP as of April
• Long 10y/15y OAT, 20y ATS and 30y OAT vs swap; expect spreads to return to November lows

(Bloomberg) -- DI rates are rising, reflecting the BCB inflation report that says it sees no room for cutting rates, analysts say.

• “The BCB cooled down the market bets on a rate cut”, Pablo Spyer, director at Mirae Asset Wealth Management, says in a phone interview from Sao Paulo
• BCB raised forecasts for inflation in most terms; only shows low inflation for 2018, a long time away given the many uncertainties ahead, Spyer says
• Despite deep recession, Brazil inflation shows resilience due to high level of indexation
• “Political imbroglio” also causing volatility
• BCB inflation estimates came in worse than market was anticipating, Rodrigo Melo, chief economist at Icatu Vanguarda Administracao de Recursos says
  • Projections show inflation is still above BCB targets; the report fails to reflect any room for cuts in the coming meetings
  • “The scenario for inflation is still uncomfortable”
  • BCB cited a forecast of BRL at 3.70/USD; given this level, CPI does not match the target, Melo says

(Bloomberg) -- White House shouldn’t let Iran use U.S. financial system because the country is known for money laundering, Sens. Marco Rubio, R-Fla., and Mark Kirk, R-Ill., say in a letter.

• Letter to Treasury Secretary Jack Lew asks that U.S. not allow “u-turn transactions,” in which a U.S. financial institution processes a transaction by Iran on behalf of a foreign financial institution
  • Senators also ask that Iran not gain access to dollar transactions outside of U.S.
• Senators say they “believe the United States should instead increase pressure on the Iranian regime in order to hold it fully accountable for its threatening and destabilizing activities outside of the nuclear realm”
• NOTE: Iran tested ballistic missiles, including one that had anti-Israel messages written on it, multiple times this month
• Related: U.S., Allies Say Iran Tests Defied UN Resolution: Reuters

(Bloomberg) -- Bangladesh is optimistic casino man’s return of $4.6m is a step to recovering more of $81m stolen funds from south Asian nation’s central bank, Ambassador to the Philippines John Gomes tells reporters in Manila.

• NOTE: Casino Man in $81m Heist Turns Over $4.6m to Philippines: Lawyer Link
• “We are very optimistic and pleased with getting at least a portion of the money”
• Bangladesh Bank officials to arrive in Philippines before April 5 to discuss transfer of recovered funds, attend next Philippine Senate hearing
• Bangladesh crime investigators to come to Philippines to start own probe
• Recovered money is effectively with Bangladesh govt now and is just with Philippine central bank for safe keeping, Julia Bacay-Abad, executive director at secretariat of Anti-Money Laundering Council tells reporters
• Philippines coordinating with China for identification of 2 Chinese nationals tagged in cyber heist: Bacay-Abad
• NOTE: Key Witness in $81 Million Cyber Heist Points to Two Foreigners Link

(Bloomberg) -- Regression analysis of yield changes in 15 minutes following employment report releases over last 24 months found that UST curve as a whole was more responsive to 1-standard deviation upside surprises in payrolls than unemployment rate or avg hourly earnings, Credit Suisse strategists led by Praveen Korapaty say in note.

• “For 2y yields, however, earnings surprises (beta of 2.7) have a comparable impact to payrolls (beta of 3.1)”
• Implication is that if wage gains surprise more than payroll gains, 2Y “should cheapen relative to the rest of the curve,” either “in leading an outright sell-off or lagging in any initial rally”
• Additionally, “upside surprises in the jobs reports are likely to be yield curve flatteners, at least initially, going forward”
• Also, initial moves in 2Y and 5Y have been “far less likely to reverse than points further out the curve,” suggesting that “on upside surprises, the initial post-payrolls flattening of the yield curve is likely to continue into the close”
• Still, CS doesn’t recommend flatteners into tomorrow’s report, as 2/10 curve “is already close to post-crisis lows,” Fed “is unlikely to tighten policy in next few months,” and March report has tendency to be weak

(Bloomberg) -- Monetary Authority of Singapore says that as part of its investigations into possible money-laundering and other offences in Singapore, it’s been conducting “thorough review of various transactions as well as fund flows” through its banking system, central bank says in e-mailed statement.

• MAS has requested a number of financial institutions to furnish information relating to review: statement
• "Given the cross-border nature of these fund flows, MAS is also working closely with and seeking clarifications from relevant authorities in other financial centres": statement
• "Besides any enforcement actions by the relevant authorities in Singapore for possible violations of our laws, MAS will not hesitate to take regulatory actions against financial institutions should they be found to have breached our banking rules. MAS will provide more details when we have completed our review.’’