Halister News

(Bloomberg) -- Any setbacks in EGBs caused by supply announcements or rebound in oil prices are likely to prove short-lived and should be seen as an opportunity to enter outright long positions, BNP Paribas strategists including Laurence Mutkin write in client note.

• Enter EUR 1y 10s30s conditional bull-flattener struck at the money (43bp), cost 4bp, target 30bp, stop -5bp, carry -4bp over 6-mo.
• Expect flattening pressures at the long end to strengthen in 2H 2016 with DV01 of PSPP purchases to increase in the months ahead, especially in the case of Germany
• 1y30y/1y10y vol ratio could rise substantially when the 10y bund yield enters negative territory
• Risk is a steepening of the curve in a bullish environment, which has not been the trend since 2H 2014