HALISTER1: Bullish Long End Bunds, 10s30s Curve Flatteners, JPM Says

Bullish Long End Bunds, 10s30s Curve Flatteners, JPM Says

(Bloomberg) -- Further ECB rate cuts can’t be entirely discounted although the cbank set the bar high; hold longs in reds Eonia as a cheap option to benefit from further cuts, writes JPMorgan strategists led by Fabio Bassi in a client note.
  • Stay long 3Y Germany on possible repricing of easing, removal of depo floor, bond scarcity
  • TLTROs, larger-than-expected QE argue for a flatter curve, tighter intra-EMU spreads; bullish for long-end Germany and 10s30s flatteners
  • In core, express search for yield theme via long 9Y Netherlands vs Germany, 10s/30s OAT flattener outright or vs Germany, 5s10s Belgium flattener vs France
  • In periphery, hold long 10Y Spain vs Germany, long 30Y Greece outright; stay long red Eonia, June 2016 ECB OIS, take profit on June 16 Euribor 1x2 put spread
  • Hold June 16 Buxl swap spread wideners on potential increase in scarcity premium
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Fabio Bassi (JPMorgan Chase & Co)

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