HALISTER1: 10Y Gilt Target Raised to 1.35% as Easing Impact Priced In: HSBC

10Y Gilt Target Raised to 1.35% as Easing Impact Priced In: HSBC

(Bloomberg) -- After overshooting to the downside, gilt yields are now headed higher; revise end of year target for 10Y to 1.35% from 1%, writes HSBC strategist Bert Lourenco in a client note.
  • Gilts have performed strongly this year (at one point delivering 17% returns), now turned decidedly bearish
  • Now that BOE has eased policy on all fronts (rates, liquidity. asset purchases), believe yields should start to rise as a reflection of the response and fall out to these events
  • Although BOE purchases exceed net issuance, it will not have the same forceful impact as that seen on the Bund market
    • Easing which further boosts inflation expectations should warrant higher 10Y yields as BOE does not control long-end rates which embed various premia
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Bert Lourenco (HSBC Securities Inc)

To de-activate this alert, click here

UUID: 7947283