Halister News

(Bloomberg) -- Analysts focus on peripheral tightening after quarter-end amid large negative net EGB supply for April.

• Commerzbank (strategists including Michael Leister)
  • EGB spreads should continue to grind tighter amid heavy reinvestment needs in 2Q, and as rising QE purchases push net supply deep into negative territory
  • Target new lows in 10y BTP/Bund spreads given political risks and rating jitters elsewhere: MORE

• HSBC (strategists including Chris Attfield)
  • If seasonality argument holds, expect month-end peripheral weakeness due to a combination of balance sheet finessing by banks going into the end of the quarter and regular month-end weakness
  • Peripheral spreads, particularly Italy, should rally at the start of April

• UBS (strategists including Justin Knight)
  • Good value in being overweight 25y-30y France vs Germany given upcoming supportive factors
  • Any concept of new carry trades as a result of LTRO-II is misplaced; banks already cash rich, expect limited take-up: MORE

• BNP Paribas (strategists including Eric Oynoyan)
  • Expect tighter 10y semi-core amid the massive rise in net negative supply in April
  • Expect OAT/Bund 25y and ATS/Bund 20y to compress to 26bp and 25bp respectively
  • Receive 10y in the EUR 2s10s30s swap fly

• Barclays (strategists including Cagdas Aksu)
  • Expect some support to duration over the coming weeks given negative net issuance, especially if risky assets do not hold up in the near term
  • Bund sell-off that started in late April last year showed how market rallies driven by supply/demand mismatch concerns can quickly reverse, especially given that the displacement effect becomes much less friendly for duration in May
  • Remain neutral in peripheral spreads for now and look for tactical short periphery trades into the referendum: MORE

• UniCredit (strategists including Michael Rottmann)
  • Expect a modest bear-steepening of EGB curves with the front-end stable; Long-end of EGB curves may see some spillover from the positive U.S. environment
  • Peripheral spreads likely to resume tightening trend with a favorable seasonal pattern after the end of the quarter

(Bloomberg) -- Anti-Money Laundering Council to seek meeting with representatives of Chinese Embassy for information about Chinese nationals allegedly involved in theft of $81m from Bangladesh reserves in Feb., council member and Insurance Commissioner Emmanuel Dooc tells Senate blue ribbon committee hearing in Manila.

• Senator Juan Ponce Enrile says Philippine govt should ask China to help identify hackers who stole funds
• Philippines seen as “weak link” in international financial system: Enrile
• Senate hearing to resume April 5, Senator Teofisto Guingona says

(Bloomberg) -- Broad concerns about the global backdrop and the effectiveness of central bank actions, domestic political risks in the euro area and spillover concerns from the U.K. referendum should prevent peripheral spreads from tightening aggressively, Barclays strategist Cagdas Aksu writes, in a client note.

• U.K. referendum risk is not fully priced yet and risk premia could easily increase in the periphery as the vote approaches
• Remain neutral in peripheral spreads for now and look for tactical short periphery trades into the referendum

(Bloomberg) -- Gulenists in U.S. are laundering money through charter schools, Turkish President Recep Tayyip Erdogan says in Istanbul, before heading to Washington to attend Nuclear Security Summit.

• U.S. must take action against Gulenists, Erdogan says, referring to Turkish preacher Fethullah Gulen, who lives in self-imposed exile in Pennsylvania
• Reza Zarrab case in U.S. not related to Turkey, “if there’s anything on him, his lawyers are there to respond”
• Says he’ll have bilateral talk w/ U.S. President Barack Obama during summit, it’s not certain how long that meeting will be
• Responding to question on March 26 Islamic State in northern Iraq that killed 1 Turkish soldier, Erdogan says air force may be used against such attacks if necessary
• NOTE: Gold Trader at Heart of Turkey Graft Scandal Charged in U.S., Link