Halister News

(Bloomberg) -- Peripheral breakevens offer most attractive levels to benefit from higher prints on energy base effects, positive inflation carry, as well as the flow impact from PSPPs, Societe Generale strategist Jorge Garayo writes in client note.

• Buy SPGBei 2019 breakevens at 0.63%, targeting 0.86% on a 3- month horizon, inflation carry +20bp
• Buy BTPei Sept. 2019 breakevens at 0.64%, target 0.84%, inflation carry +20bp
  • Rolling stops at -15bp PnL in both
• On a seasonality-adjusted basis, Spanish and Italian breakevens are some 20bp cheaper than core markets
• Extra pickup in z-spread vs nominal equivalents is 25-27bp, some 15-17bp higher than in core markets, which is not explained by credit or liquidity differences vs core linkers