Halister News

(Bloomberg) -- Yields on Australia’s 10-year notes near a recent high of about 2.9% are a “buy signal,” according to HSBC.

• Recent RBA communication has been remarkably upbeat, and 3-year yields could well re-test top of the 1.92-2.22% 3Q range
  • Tendency for the curve to flatten sharply as RBA hikes should be repeated given rapid rise in household leverage
  • Curve looks steep relative to its peers and supply is supportive
• Also “mildly bullish” on N.Z. govt bonds
  • RBNZ is firmly in a holding pattern while real yields are still the highest in G-10 and curves are steeper than most peers, providing plenty of buffer and attractive carry
• Maintains long duration stance in EM rates
  • Too early to de- risk as positioning is still light and duration extension in EM local rates is yet to kick off
  • High real rates, a benign inflation outlook and scope for further easing in several markets support HSBC’s bullish stance
  • Retains preference for local bonds in Indonesia (20-year), Malaysia (20-year), South Africa (13-year), India (13-year), Brazil (10-year), Mexico (10- year) and Russia (five-year)

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Kartik Goyal in Mumbai at kgoyal@bloomberg.net