Short Body of UST 2/5/10 Butterfly on Fed View, SocGen Says
Source: BFW (Bloomberg First Word)
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Subadra Rajappa (Societe Generale SA)
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UUID: 7947283
(Bloomberg) -- Belly of UST curve is close to richest level in 2 years and “could cheapen if news out of China improves or the data in the U.S. starts to pick up after seasonal weakness” in 1Q, Societe Generale strategists led by Subadra Rajappa say in April 14 note.
Alert: HALISTER1- Going short belly of 2/5/10 butterfly is a carry-efficient way to position for higher front-end yields “if the market starts to price in hikes sooner”
- Alternatively, 2s5s and 2s10s swap spread curve steepeners should benefit if prospect of more hikes leads to more term premium in repo; risk is a surge in corporate issuance that puts pressure on belly of swap spread curve
- Short positions in long end of UST curve still aren’t recommended despite valuations across curve looking “somewhat rich” because this week’s 10Y and 30Y auctions revealed continued demand from overseas accounts
Source: BFW (Bloomberg First Word)
People
Subadra Rajappa (Societe Generale SA)
To de-activate this alert, click here
UUID: 7947283