Halister News

--ANTONY SGUAZZIN

(Bloomberg) -- Gilt 2s10s curve could come under further bull-flattening pressure, with 88bps support now cropping up on radar, the year-to-date low, Bloomberg technical analyst Sejul Gokal writes.

• See live chart here; 2s10s now at 93bps
• 2s10s curve steepening has faltered right against 13-DMA resistance at 98bps, with overhead ichimoku cloud providing further headwinds this week
  • MACD histogram is negative and far from Feb. and April extremes, suggesting flattening leg/momentum in its infancy
• Interim curve support at 91bps (May 18 low); deeper compression level seen at 88bps (low of French 1st round election day); larger objective at 76bps (61.8% Fibonacci of 2016 widening move)
  • A steeping move above 100bps could challenge the flattening bias, with a move above 105 bps (at close) to firmly negate the outlook
• Weaker-than-expected U.K. 1Q growth data, lower oil prices and narrowing gap between the Conservative and Labour parties in latest election poll have collectively helped underpin long-end gilts this week
• GBP OIS forward markets show decreasing bets on a rate hike by mid-2018. The implied odds of a 25bps increase by June 2018 has slumped to 32% vs. 80% about two months ago (assuming 4bps Sonia-base rate corridor)

• NOTE: Sejul Gokal is a technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

Story Link:NSN OQK4OM6JTSEB

--ANDREW J. BARDEN

(Bloomberg) -- Exit of Maria Silvia Bastos Marques from the BNDES and Brazil outlook cut by Moody’s shouldn’t change perception that the general line of economic policy will remain even if President Temer falls, analysts surveyed by Bloomberg say. Maurico Oreng, Strategist at Rabobank Bank in Brazil:

• Having Maria Silvia Bastos in economic team was obviously excellent and investors will focus on other people from the team; if they remain, there would be no reason for greater market reactions
• Moody’s action isn’t surprising, it’s aligned with other agencies, reflecting uncertainties that everyone knows

Jose Francisco Gonçalves, Chief economist at Banco Fator

• Temer set up a dream team for the fiscal adjustment and to break with last govt; in this sense, acceptance of the economic team by the market is clear, with or without Maria Silvia Bastos
• Since there’s no threat to the team and its attitude, Bastos’ exit isn’t dangerous for the market; if BNDES goes back to what it was in the previous administration, then it’s complicated

Carlos Kawall, Chief economist at Safra Bank

• "Everyone saw Maria Silvia’s work as very positive, adjusting BNDES in terms of macroeconomic policy coherence, alignment with privatization and concessions projects, seeking to reduce the size of the bank through repayment to the Treasury and reduction of the subsidies it granted ; Exit of Maria Silvia is a pity, but BNDES project will continue"

 Paulo Nepomuceno, fixed-income strategist at Coinvalores

• Investors still work with the expectation that, should there be a rupture in Temer govt, economic area and the environment of reforms wouldn’t face major changes
• NOTE: Brazil’s Iron Lady Resigns as Head of BNDES Development Bank (3)
• NOTE: Brazil Outlook Lowered to Negative by Moody’s on Temer Probe (1)

Original Story: Saída de Maria Silvia e Moody’s não desviam foco do mercado --With assistance from Marisa Castellani. To contact the translator on this story: Giulia Camillo in Sao Paulo at gcamillo@bloomberg.net Reporter on the original story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net Editors responsible for the original story: Daniela Milanese at dmilanese@bloomberg.net Taís Fuoco