HALISTER1: Brexit Risk, More QE Support Long-End EUR Rates Curve: SocGen

Brexit Risk, More QE Support Long-End EUR Rates Curve: SocGen

(Bloomberg) -- Close G-4 duration longs as dovish Fed adds fuel to the risk rally, supporting USD pullback, higher commodities, SocGen strategists led by Vincent Chaigneau write in client note.
  • EUR rates should continue to hold up strongly, supported by increased QE buying, collapse of net supply in April, political risks in periphery
  • Hold bias toward EUR spread-compression trades following latest ECB announcement; continue to favor carry and roll short, intermediate non-core sectors
  • Despite general positive tone in markets spurred by dovish central banks, Brexit risks and increased ECB purchases also present bullish case for long-end EUR rates
    • Recommend buying EUR 10s30s conditional bull-flatteners with 1-month expiry
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Vincent Chaigneau (Societe Generale SA)

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