Halister News

(Bloomberg) -- Amid backup in yields and “potential for a hawkish surprise,” 2/10 curve flatteners “offer an attractive risk-reward” into March FOMC meeting, Barclays strategists led by Rajiv Setia say in March 4 note.

• “Financial conditions appear to have largely normalized back to the mid-December levels,” and “Fed is likely to signal a tightening bias at the March meeting,” even “as it keeps the target range for the fed funds rate unchanged”
• However, long-term rates “do not have much room for a large selloff” amid global backdrop, and concerns related to turn in business cycle, oil, low neutral rates and adverse effect of negative interest rates
• Friday’s payroll report should “alleviate concerns about an imminent slowdown, and bring back questions about when the hiking cycle can resume”; also core inflation has rebounded and breakevens are back to the mid-Dec. levels