Halister News

(Bloomberg) -- Eurozone flash Feb. CPI y/y est. 0.0% vs prev 0.3%.

• Eurozone Feb. core CPI y/y est. 0.9% vs prev 1.0%
• NOTE: ECB Window for Stimulus Message Closing as Inflation Stalls

(Bloomberg) -- The Irish spread looks the better one to back, given greater likelihood of a stable govt in Ireland even if election news over the weekend was disappointing, Societe Generale analysts write in client note.

• Both 10Y IRISH and SPGB spreads over bunds have been widening in tandem over past weeks amid political uncertainty and the risk-averse mood in markets
• A coalition between Fine Gael and Fianna Fail parties remains the most likely option, although the risk of an unstable minority government or even a centre-left alliance is increasing
  • With many key politicians saying they don’t want to work with anyone else, the suspense is likely to continue up to and beyond when parliament meets on March 10
• NOTE: Parliament is due to choose a prime minister on March 10; serious negotiations may not start until after that fails to produce a winner

(Bloomberg) -- U.K. Jan. mortgage approvals est. 74.0K vs prev 70.8K.

• U.K. Jan. net consumer credit est. 1.4b vs prev 1.2b

(Bloomberg) -- IRISH bonds will continue to lag European peers until there’s more clarity on the political outlook after Ireland’s election provided no clear winner, Danske analyst Pernille Bomholdt Henneberg writes in client note.

• Spread to EU peers should tighten longer term, as Ireland has solid fundamentals and a modest borrowing requirement for 2016
  • It is though crucial the govt remains committed to fiscal consolidation
• There’s speculation Fine Gael, the senior partner in the incumbent coalition, and Fianna Fail may set their historical division aside and form a grand coalition
  • Seems unlikely as statements so far don’t indicate either party would like to form a coalition govt
  • Fine Gael could go for a minority government, although this would be a fragile solution
• NOTE: Fine Gael and Fianna Fail won about 50% of votes in Feb. 26 election; grand coalition appears to be only viable option for stable govt

(Bloomberg) -- Anti-Money Laundering Council fully committed to combat money laundering and will help preserve integrity of financial system, it says in e-mailed statement.

• It’s council’s policy to keep dirty-money investigations confidential: statement
• NOTE: Council probing $100m money laundering via banks, Inquirer reported Link

(Bloomberg) -- Bund yields likely to test and break lows, Citigroup strategists including Harvinder Sian write in note.

• See little value at the front-end where the ECB deposit rate is priced below -50bp
• However, not initiating shorts because “ECB chatter” about the tiering of deposit facility can maintain pricing and push forwards in the 3-yr+ even lower
• Analysis suggests that the pricing of negative rates further along EUR OIS forwards curve is feasible not just because ECB can take mkt expectations lower with a discussion on tiering, but more remarkably because that may well be the equilibrium
• Recommend EUR 6m10y 0.50/0.35/0.20 receiver ladder
  • Rolls positively by 30c on 3-mo. window and loses money at expiry if 10y moves below 5bp, which would require actual delivery of a -75bp to -100bp deposit rate; so risk to the trade would be the delivery of an even deeper depo cut to over -75b; stop at an underlying rate of 0%

--VERONICA EK