Halister News

(Bloomberg) -- Expect recent stability in long-end rates to persist, as potential for “slowing growth and strong fund flows” into USTs will mitigate any near-term sell offs, Citi strategists led by Jabaz Mathai say in April 15 note.

• “We think that broadly speaking, the 1.50% to 2% range encapsulate most trading activity over the next few months, and the 1.75% strike on the 10y should exert a strong centripetal force on trading activity”; it has closed more than 5bp away on just one day this month
• Front-end now prices in just one hike by mid-2017, is vulnerable to a repricing; continue to recommend hedging potential for rate moves to be priced back into curve by owning EDZ6 99.00/98.75 put spreads
• Core duration trades unchanged: long 5y real yields, long US duration vs Europe through 5Y5Y, call spreads on the long bond