Aussie Divergence to New Zealand, U.S. Rates to Continue: NAB
(Bloomberg) -- Curve steepeners and AU-US spread compression are preferred positions in the environment of higher global yields in the second half of 2017, NAB rates strategists Skye Masters and Alex Stanley wrote in note.
- Recommends holding 3/10y swap curve steepener as global bond sell-off will continue while RBA stays neutral
- Three-year ACGB yields still have scope to trade to 60bp over cash with Australian central bank on hold; would need to see at least this level to consider adding long positions
- Continues to look for opportunities to establish long/received positions in the front end, targeting around 2.25% on AU 1y1y fwd
- Remains short AU-US 10-year bond differential from 34bps, targeting 10bps with stop now at 41bps
- If global central banks move away from easing, RBNZ will probably exit ahead of RBA; expects NZ-AU rate spreads to widen
To contact the reporter on this story: Michael G. Wilson in Sydney at mwilson176@bloomberg.net
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HALISTER1Source: BFW (Bloomberg First Word)
People Alex Stanley (National Australia Bank Ltd)
Skye Masters (National Australia Bank Ltd)
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