HALISTER1: Yellen Not Dovish Enough; Stay Long USTs, Bunds, Gilts: MS

Yellen Not Dovish Enough; Stay Long USTs, Bunds, Gilts: MS

(Bloomberg) -- Yellen was not dovish enough to assuage growth, inflation concerns; suggest investors remain long duration 5Y to 10Y Treasuries, Bunds, and Gilts ahead of G-20, ECB, Fed meetings, writes Morgan Stanley strategists led by Matthew Hornbach in Feb. 10 client note.
  • Until Fed makes clear “gradual” could mean just one or two rate hikes in 2016, instead of three or four, risk markets will struggle in the absence of positive catalysts
  • Expect worse-than-expected U.S. economic data to continue, maintain bullish on 5Y to 10Y Treasuries; expect 1.55%-1.75% range to contain yields until the March FOMC
  • Risks are skewed even lower yields, retain U.S. 2s10s curve flattening bias
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
MS US (Morgan Stanley)

People
Matthew Hornbach (Morgan Stanley)

To de-activate this alert, click here

UUID: 7947283

HALISTER: Deutsche Bank Woes Show Desire for ECB Clarity in Volatile World

Deutsche Bank Woes Show Desire for ECB Clarity in Volatile World

Alert: HALISTER
Source: BN (Bloomberg News)

Tickers
DBK GR (Deutsche Bank AG)
2539Z GR (European Central Bank)

People
Alan Lemangnen (Natixis)
Ignazio Angeloni (European Central Bank)
Karel Lannoo (Centre For Euro Policy Studies)
Nicolas Veron (Bruegel)
Patrick Lemmens (Robeco Groep NV)

To de-activate this alert, click here
To modify this alert, click here

UUID: 7947283

HALISTER1: AUCTION PREVIEW: 7Y BTP Offers Little Concession, 15Y Looks Rich

AUCTION PREVIEW: 7Y BTP Offers Little Concession, 15Y Looks Rich

(Bloomberg) -- Italy to sell 3.5% 03/2030 for EU0.5b-1b; 1.45% 09/2022 for EU2b-EU2.5b, and 0.3% 10/2018 for EU1.5-2b at 11am CET; 3Y to benefit from ECB outlook, 7Y offers little concession, 15Y looks rich, according to analysts.
  • UniCredit (Luca Cazzulani)
    • 3Y may benefit from liquidity parking, in context of QE and rising excess liquidity; given recent curve steepening, bond is cheapen than usual vs BTP 05/2018
    • 09/2022 has cheapened vs 08/2021 in yield, z-spread; will be tapped once more, before new issue in mid-March
    • Demand at extra-long end is healthy at the moment, as seen in launch of new 30Y BTP; 15Y area has richened vs wings, would prefer to own 30Y
  • SocGen (Marc-Henri Thoumin)
    • 3Y BTP offers limited value relative to curve; prospect of further ECB easing next month is supportive; short maturities also more protected in risk-off environment
    • Limited value in 09/2022 issue, has seen no pre-auction concession
    • 15Y issues looks rich on curve; after recent performance, expect limited interest in this bond
  • BNP (Ioannis Sokos)
    • Size of auctions is relatively small, given recent 30Y syndication
    • BTPs have underperformed SPGBs on concerns over European banks, deficiencies in Italian “bad bank” plan; too early for long-BTP/short-Spain, 10Y spread around middle of recent range
    • 7Y issue offers pickup of 18bps vs 12/2021, while 3Y looks attractive vs 02/19s
  • Barclays (Huw Worthington)
    • 3Y trades at roll discount of ~3.6bps, which looks cheap; cross-market, has cheapened 22bps vs Germany, back at 6-mo. wides
    • 09/2022 trades at roll discount of 4.5bps, which looks rich vs prior rolls; cross-market, has cheapened 34bps vs Germany, back at 6-mo. wides
    • Long-end BTP is at rich levels on curve; also looks expensive cross-market vs Spain
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Luca Cazzulani (UniCredit SpA)
Huw Worthington (Barclays PLC)
Ioannis Sokos (BNP Paribas SA)
Marc-Henri Thoumin (Societe Generale SA)

To de-activate this alert, click here

UUID: 7947283

HALISTER1: AUCTION PREVIEW: Expect Demand on Curve, in ASW for 30Y Gilt

AUCTION PREVIEW: Expect Demand on Curve, in ASW for 30Y Gilt

(Bloomberg) -- U.K. to tap 3.5% 01/2045 for GBP1.5b at 11:30am CET. Analysts suggest outright yields not attractive, though see value in ASW and on the curve.
  • BNP (Parisha Saimbi, Shahid Ladha)
    • Recent long-end auctions have been difficult to digest, smaller size at GBP1.5b should be supportive
    • 30Y gilts yields at very low levels amid latest risk- off; bond offers strong value vs swaps, yielding 60-70bps over, 30Y gilt ASW close to cheapest levels ever
    • 30Y sector looks cheap vs 10Y, 50Y; in RV looks ~4bps cheap to fitted ASW curve as is most of 25Y-30Y sector
  • SocGen (Marc-Henri Thoumin)
    • Highest yielding gilt on curve, good ASW pick-up, recent cheapening vs peers, gilt coming toward end of tapping cycle, all seen as supportive for auction
    • Low level of outright yields presents largest outright risk, last auction sold close to current levels in April came with larger 0.3bp tail
    • Expect decent ASW demand at auction, though see 30Y gilts as likely to remain cheap on ASW given directional spread moves, upcoming long-end supply
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Marc-Henri Thoumin (Societe Generale SA)
Parisha Saimbi (BNP Paribas SA)
Shahid Ladha (BNP Paribas SA)

To de-activate this alert, click here

UUID: 7947283

HALISTER1: AUCTION PREVIEW: Analysts Favor Owning Ireland vs France

AUCTION PREVIEW: Analysts Favor Owning Ireland vs France

(Bloomberg) -- Ireland to tap 1% 05/2026 for EU1b 11am CET. Analysts see good value in owning Ireland vs France, given strong economic fundamentals and favorable fiscal position although election poses risks.
  • SocGen (Marc-Henri Thoumin)
    • 10Y has seen decent cheapening against shorter neighbors; 2022/2025 ASW slope particularly steepened this year
    • Respite in European credit/sovereign complex on hopes of further ECB action should favor re-flattening
    • Expect a reversal of recent underperformance vs OATs once election is out of the way; ECB easing in March should support Irish/semi-core convergence
  • BNP (Ioannis Sokos)
    • 10Y Ireland/OAT spreads too wide at 43bps; Irish bonds will continue being attractive in 2016 due to favorable fundamentals, supply position
    • Recent widening of Irish spreads started before more general spread widening, due to the upcoming election risk, do not expect market unfriendly outcome
    • Ireland has completed 40% of funding this year, EU5b-6b remaining vs EU13b in coupons, redemptions, plus ~EU8b in PSPP purchases
  • Danske (Jens Peter Sorensen)
    • Ireland has underperformed France in 10Y sector, despite solid economic fundamentals, recent upgrade from Fitch
    • Concerns around general election, possible Brexit spillover has weighed on sentiment
    • Continue to like long Ireland, given modest supply, ECB QE, strong fundamentals; buy Ireland vs France or Belgium
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
1266Z ID (Republic of Ireland)
2539Z GR (European Central Bank)

People
Marc-Henri Thoumin (Societe Generale SA)
Ioannis Sokos (BNP Paribas SA)
Jens Sorensen (Danske Bank A/S)

To de-activate this alert, click here

UUID: 7947283