HALISTER1: BOK Seen on Hold Next Week Even After BOJ Negative-Rate Move: CA

BOK Seen on Hold Next Week Even After BOJ Negative-Rate Move: CA

(Bloomberg) -- Bank of Korea will hold its key rate at 1.5% on Tuesday despite coming under renewed pressure to ease after BOJ adopted negative rates, Gary Yau, EM strategist at Credit Agricole, writes in client note.
  • Market now starting to price in cuts by BOK after the poor Jan. exports data, but for now, there are reasons to believe the bank is on hold
  • KTB yields fell sharply in line with global rates following BOJ decision, as mkt prices in increased central-bank dovishness
  • BOJ decision shouldn’t affect South Korean monetary policy though; direct effects would be seen through the exchange rate but JPY/KRW is actually higher after BOJ, weakening any call for a cut on that basis alone
  • Negative sentiment globally may weigh on South Korean economy, but benefits of additional rate cuts may be small and the bar for additional easing remains high
  • Given the volatility of markets, a more dovish tone from the BOK is a possibility but yields on KTBs will require more than dovish rhetoric to rally
  • Unanimous decision to hold rates is most likely but gains in yields may be stifled by ongoing risk-off sentiment; any split in votes would be key for chances of cuts going forward
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
1206Z KS (Bank of Korea/The)

People
Gary Yau (Credit Agricole SA)

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UUID: 7947283

HALISTER1: Pimco’s Kiesel Says Corporate Credit Valuations Are ‘Compelling’

Pimco’s Kiesel Says Corporate Credit Valuations Are ‘Compelling’

(Bloomberg) -- Pacific Investment Management Co.’s head of corporate bond portfolio management Mark Kiesel spoke in interview in Sydney on Friday.
  • Says corporate bond valuations are “compelling” and spreads are too wide
  • Market is underpricing Federal Reserve rate increases and inflation risks
  • Has overweight position on investment-grade debt and has been adding to it
  • In IG space he favors:
    • Bonds from U.S. and some European banks, mostly with a preference for more senior ranking securities
    • Securities related to U.S. housing sector such as non- agency mortgages and debt from homebuilders and building materials companies
    • Health care, medical devices and pharmaceuticals
  • Has “started to play selective offense” in investment- grade energy bonds
  • Sees oil under pressure for next few months, then rising to $45 or $50 a barrel by year end; currently around $27
  • Says U.S. economy is healthy and can generate 2% growth
  • Sees core inflation accelerating to 2% by end of 2016; says TIPS are one of most attractive assets
  • Sees U.S. rate rise putting downward pressure on corporate bond supply
  • Low rates elsewhere in the world likely to encourage demand for corporate bonds, according to Kiesel
  • He says concerns about banks overblown, noting strength of capital levels and profitability
  • High-yield bond market pricing in 8% default risk, while he sees it at 5%
  • Kiesel says Pimco investing in HY debt “defensively”
  • “Cautious” on emerging markets and sees developed markets offering better risk-reward
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
21429Z US (Pacific Investment Management Co LLC)

People
Mark Kiesel (Pacific Investment Management Co LLC)

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UUID: 7947283

HALISTER1: Enter Small G-4 Duration Long, Target 0.05% on 10Y Bund: SocGen

Enter Small G-4 Duration Long, Target 0.05% on 10Y Bund: SocGen

(Bloomberg) -- Enter small long G-4 duration as financial-market stress unlikely to abate ahead of G-20 meeting (Feb. 26-27); target 0.05% in 10Y bund, SocGen strategists including Vincent Chaigneau write in client note.
  • Financial stress spreading from EM to DM; banking sector is major channel for contagion; investors losing faith in fiscal, monetary patches
  • Add back small long G-4 duration, after removing last week, see U.S. 10Y below 1.50%
  • Recommend paying EUR 5s10s30s fly; when 10Y rate moves below 0.75% fly changes directionality; renewed market stress would drive the fly up; enter at 5bps, target 12bps, stop -2.5bps
  • Re-weight toward soft core vs core, peripheral if 10Y BTP/Bund, SPGB/Bund spreads break above 2015 highs
  • Favor carry trades in short-dated BTPs, SPGBs; avoid longer dates, fear 2015 highs will be broken
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Vincent Chaigneau (Societe Generale SA)

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UUID: 7947283

HALISTER: Reed Alum With a Perfectionist Streak? Don’t Call Him Steve Jobs

Reed Alum With a Perfectionist Streak? Don’t Call Him Steve Jobs

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
AAPL US (Apple Inc)
0047180D US (Puppet Labs Inc)

People
Steven Jobs (Apple Inc)
Louis Lavigne (Lavrite LLC)
Luke Kanies (Puppet Labs Inc)
Matt Murphy (Menlo Ventures)
William Koefoed (Puppet Labs Inc)

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UUID: 7947283

HALISTER: Paulson, Icahn Score AIG Board Seats, Only to Face Uphill Battle

Paulson, Icahn Score AIG Board Seats, Only to Face Uphill Battle

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
AIG US (American International Group Inc)
IEP US (Icahn Enterprises LP)
573991Z US (Paulson & Co Inc)

People
Carl Icahn (Icahn Enterprises Holdings LP)
John Paulson (Paulson & Co Inc)
Charles Sebaski (Bank of Montreal)
David Havens (Imperial Capital LLC)
Douglas Steenland (ILFC Holdings Inc)

Topics
Who's News - People

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UUID: 7947283

HALISTER1: Money-Laundering Woes Push Mexico Into Dollar-Transfer Business

Money-Laundering Woes Push Mexico Into Dollar-Transfer Business

Alert: HALISTER1
Source: BN (Bloomberg News)

Tickers
JPM US (JPMorgan Chase & Co)

People
Agustin Carstens (Banco de Mexico)
Daniel Glaser (United States Department of the Treasury)
James Dimon (JPMorgan Chase & Co)
Luis Robles Miaja (Bbva Bancomer SA)
Ricardo Medina Macias (Banco De Mexico)

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UUID: 7947283