HALISTER1: Sell 10Y Bunds vs 5Y Treasuries, Hold UST 5s30s Steepeners: MS

Sell 10Y Bunds vs 5Y Treasuries, Hold UST 5s30s Steepeners: MS

(Bloomberg) -- Recommend investors sell 10Y bunds vs buying 5Y USTs to reflect more bearish duration bias on bunds than USTs, and curve steepener bias in USTs, Morgan Stanley strategists including Matthew Hornbach write in a client note.
  • Recommend long FVM6 futures vs RXM6 futures at 114bps
  • Bond market indicators have shifted to bearish as positive bond market momentum has dissipated; yet to embrace short bias given risks around WTI Crude, ECB, Fed, BoJ meetings in coming weeks
  • Maintain recommendation to scale into USTs 5s30s steepeners due to Fed’s increased focus on global economic outlook
  • Recommend selling 5Y TIPS roll, trades ~8bps rich to fair- value estimates; post-auction recommend buying 04/2020 or 04/2021 breakevens for positive carry season
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
MS US (Morgan Stanley)

People
Matthew Hornbach (Morgan Stanley)

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