Halister News

(Bloomberg) -- Bund put skew may richen following any fading of the boost to bonds from flight-to-quality flows after U.S. missile strike on Syria as well as any downside drag to NFP from Winter Storm Stella, Bloomberg strategist Tanvir Sandhu writes.

• Any move in yields to the lower end of the recent range on a weather-related drop in NFP may see tactical bund downside richening, with reversal in ECB rate-hike speculation now having gone a long way
  • Weather-sensitive categories may drag NFP lower following winter storms and sharp drop in temperatures in March
• Further flattening in money-market curves following recent ECB rhetoric rejecting Eonia hike pricings now has limited room
  • ECB accounts showed that Governing Council views removal of easing bias in the existing guidance on rates as premature and dismissed on grounds that such a change may lead to an undue increase in forward rates
  • Interest in paying the back-end of 2018 now offers better risk-reward as the battle between hawks and doves could intensify in the second half of this year (see more here) while Le Pen and flare-ups in Italian politics pose risks

• NOTE: Tanvir Sandhu is an interest-rate and derivatives strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice