Halister News

(Bloomberg) -- View is based on “expectation of low neutral rates, a non-trivial risk of the business cycle turning sometime over the next couple of years, and negative term premium,” Barclays strategists led by Rajiv Setia say in April 1 note.

• They continue to recommend being long UST 10Y vs German 10Y, and, based on “potential for long-end driven moves in rates, buying 3m*30y strangles, selling 3m*5y strangles”
• ECB is “unlikely to take rates further into negative territory,” so bunds have limited room to rally, while a large selloff “is unlikely to be led by the U.S.”
• U.S curve has steepened on Fed’s dovish shift and “appears a touch too steep”
• Long end “should drive the curve over the next few months,” has “plenty of room to rally” on U.S. economic weakness or “adverse shock” from EU referendum