Korean Threat Adds to Debt Ceiling Drive for Treasuries: Mizuho
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
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Hiroko Iwaki (Mizuho Securities Co Ltd)
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UUID: 7947283
(Bloomberg) -- Investor sentiment was worsening even before North Korea fired a missile over Japan because of the U.S. debt ceiling and a possible government shutdown, according to Mizuho Securities.
- “If it had been just a missile, the market reaction wouldn’t have been as big as this,” Hiroko Iwaki, senior foreign bond strategist at Mizuho in Tokyo, says by phone Tuesday
- Debt ceiling is spurring risk-off moves and bond buying even though it could cause a U.S. rating downgrade
- Should the risk of a U.S. govt shutdown rise, 10-year yield may fall to 2%
- NOTE: Treasury 10- year note futures gain as much as 11/32 to 127-11/32, highest for front-end contract since Nov. 11, after North Korea fired missile. 10-year yield drops 3 bps to 2.13%
- Suggests investors avoid buying Treasuries now given they are fairly overvalued in the current range
- After touching 2%, “yields will almost certainly rebound, so it’s better to build long positions at higher yields rather than betting on a military conflict or a government shutdown that may or may not happen,” she says
Alert: HALISTER1
Source: BFW (Bloomberg First Word)
People
Hiroko Iwaki (Mizuho Securities Co Ltd)
To de-activate this alert, click here
To modify this alert, click here
UUID: 7947283