Halister News

(Bloomberg) -- Increase in longer-term inflation expectations since U.S. election day “is justified given that the fiscal outlook has changed,” though risk-reward now favors shorting long-end breakevens, Citi strategist Jabaz Mathai says in note.

• Citi recommends selling 10Y breakeven at 198.6bp, targeting 175bp, with stop at 210bp
• Factors that should continue to limit inflation include labor substitution, USD strength, commodity prices and subdued wage growth
• Risks to recommendation would be “mostly policy driven,” including move toward trade tariffs or an infrastructure spending plan in 2017