HALISTER: Goldman Sees High Probability That OPEC Extends Agreement

Goldman Sees High Probability That OPEC Extends Agreement

(Bloomberg) -- Oil price appreciation must come from front-end, Goldman Sachs Head of Commodity Research Jeffrey Currie says on Bloomberg TV.
  • Downside risk for WTI $3-$5/bbl if no OPEC deal, upside trading range $55-$60/bbl if deal extension
    • $57.50/bbl base case for WTI, $59/bbl base for Brent
  • Goldman sees rising demand for oil outside U.S
    • Sees carry as the route to drive returns on oil
    • Oil price determined by cost to produce from shale
    • Positive backwardation developing on crude oil
  • Trump tax details may trigger gold sell-off
  • Low potential for border adjustment tax
    • Border adjustment tax would make dollar stronger
  • Sees China’s raw steel demand rising

Alert: HALISTER
Source: BFW (Bloomberg First Word)

Tickers
GS US (Goldman Sachs Group Inc/The)

People
Jeffrey Currie (Goldman Sachs & Co)

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UUID: 7947283

HALISTER1: DBRS Illustrative Insights - Portugal’s Rapidly Declining Fiscal Deficit

DBRS Illustrative Insights - Portugal’s Rapidly Declining Fiscal Deficit

Alert: HALISTER1
Source: DBR (Dominion Bond Rating Service)

Tickers
1174Z PL (Portuguese Republic)

People
Adriana Alvarado (DBRS Inc)
Gordon Kerr (Dbrs Europe Ltd)

Topics
Credit Analysis Research
Credit Research
Fixed Income Research
Investment Research
Issuer Focused Research

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UUID: 7947283

HALISTER1: TD Recommends 5y Swap Spread Tightener Based on Deficit Outlook

TD Recommends 5y Swap Spread Tightener Based on Deficit Outlook

(Bloomberg) -- Swap spread widening driven by expectations for regulatory rollback and repo clearing initiatives “has been overdone,” TD strategists Priya Misra and Gennadiy Goldberg say in note.
  • “Treasury supply is likely to pick up due to deficits and Fed portfolio runoff,” cheapening USTs vs swaps
  • They recommend 5y swap spread tightener at 13bp, target 5bp, stop at 17bp
  • Tax plan expected to be unveiled Wednesday is likely to raise deficits over a 10-year period, and swap spreads “have historically shown a strong relationship with budget deficits”
  • Fed balance sheet runoff should also cheapen USTs; TD expects additional issuance to be concentrated in sub-5yr sector
  • Also, May is typically the second-biggest month of the year for corporate bond sales, which can tighten swap spreads as issuance is hedged via receiving in swaps
  • Risks to trade include a federal government shutdown that sparks flight-to-quality, tax reform elements that lead to reduced corporate bond issuance and inclusion of money market funds in central repo clearing, which could lower dealer balance sheet costs

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Gennadiy Goldberg (TD Securities USA LLC)
Priya Misra (TD Securities USA LLC)

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UUID: 7947283