HALISTER1: Foreign Demand Seen Supporting 10Y USTs vs 5Y, 30Y: RBS

Foreign Demand Seen Supporting 10Y USTs vs 5Y, 30Y: RBS

(Bloomberg) -- Foreign demand expected to return for historically preferred benchmark 10Y USTs, favoring 10s out-performance in 5s10s30s fly, RBS strategist John Briggs writes in a client note.
  • Trade view expressed through buying 10s on 5s10s30s cash fly at -27bp, target -36bp with stop at -25bp
    • Foreign investment sponsorship has been a “substantial driver” of past 10Y richening
    • Current market correction due to a “short term pullback in a bull bond market”
    • 5s10s30s fly currently trades ~8bps off current 2016 high level (~-19bp) and ~10bp above yearly low (~-38bp)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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John Briggs (RBS Securities Inc)

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