HALISTER1: Currency Hedging by GPIF Makes Core Bonds Less Attractive: RBS

Currency Hedging by GPIF Makes Core Bonds Less Attractive: RBS

(Bloomberg) -- A full FX hedge of foreign bonds by GPIF would make ownership much less attractive for the fund, RBS strategists including Marco Brancolini write in client note.
  • Among core European bonds, only long-end gilts and OATs would offer a pickup to JGBs
  • Continue to like France 5s15s flatteners as Japanese investors start pushing down the curve; OATs now yield more than USTs once adjusted for cross-currency basis
  • Japanese investors may also start investing in periphery
  • NOTE: Japan’s GPIF to Embrace Currency Hedging, Nikkei Says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
GPIVFZ JP (Government Pension Investment Fund Japan)

People
Marco Brancolini (Royal Bank of Scotland Group PLC)

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