Halister News

(Bloomberg) -- Aminu Gwadabe, chairman of the Association of Bureau de Change of Nigeria, pledges to fight corruption after meeting Economic and Financial Crimes Commission head in Abuja.

• “The naira is weakened by unearned income and high demand for foreign exchange used for laundering activities,” he says in statement
• Working on a system that will enable the EFCC to monitor FX trade by Bureau de Change Operators

(Bloomberg) -- Use double old 2Y note maturing Dec. 2017, since liquidity premia in 1st several issues create a “clearly negative roll” to spread widening trades, Credit Suisse strategists led by Praveen Korapaty write in note.

• 2Y swap spreads -0.74bp to 4.51bps, touched record low 3.63bps
• Risk to trade is “strong wave” of reserve manager selling that puts downward pressure on spreads
• Also an enticing trade because there’s scope for Libor-OIS to widen during course of yr, putting widening pressure on swap spreads

(Bloomberg) -- Correspondence between New York Fed’s ACM term premium and 5/10/30 butterfly shows that outperformance of 10s on curve “has to do with the fact that markets still aren’t assigning a high probability to a continued series of hikes this year,” BMO strategist Aaron Kohli says in note.

• “With the modeled term premium series now at an all-time low, selling 10s on curve makes more sense from a longer- term perspective as well as near- to mid-term horizon”

(Bloomberg) -- BRL is outperforming most peers amid new developments in the so-called Carwash probe; Isto É magazine today reported senator Delcidio Amaral gave testimony to prosecutors that may implicate President Rousseff.

• “The market is pricing in the chance of a sooner-than- expected political shift,” Luciano Rostagno, chief strategist at Banco Mizuho do Brasil says in phone interview
• Isto É magazine report says testimony alleges President Rousseff knew about the “whole process” of Petrobras purchase of an oil refinery in Pasadena, Calif., where buyer allegedly paid bribes
  • Also allegedly cited Ex-President Lula in testimony
  • The senator’s lawyer denied he made made a plea bargain
• Mkt sees developments as potentially increasing chance of a new govt, one which may be more committed to reforms and fiscal adjustment
• NOTE: Former head of builder OAS, one of companies investigated in Carwash probe, is negotiating a plea bargain, Folha, one the country’s main newspapers, says
• There are signs increasing number of people willing to provide testimony, Ricardo Ribeiro, political analyst at MCM Consultores says
  • Willingness to testify may increase after arrest of Joao Santana, publicist in last Rousseff campaign, and also following a court decision that states a person condemned in appellate court goes immediately to jail, without hope of remaining free pending result of further appeals
• Political outcomes aren’t clear yet; some people may also cite opposition in testimony, and there is also uncertainty on how an eventual new government will be built if Rousseff exits, Ribeiro says