Halister News

(Bloomberg) -- Fed “seems unclear about the next rate move, and consensus forecasts for rates are still too high,” Citi strategist Jabaz Mathai says in April 8 note.

• “Equally important, lower growth in other economies that lowers sovereign rates elsewhere, results in an asset allocation into higher yielding U.S. Treasuries by non-U.S. investors”
• Citi maintains “overall bullish view” of USTs and recommends long-duration bias expressed via long 5Y real yields and long call spread on 30Y
• USTs “should outperform” in any selloff in bunds as occurred during 2Q 2015, however positioning “is more balanced now in bunds,” suggesting German 10Y yield will “move even lower, possibly into negative territory”
• Meanwhile, prospect of increased policy accommodation by ECB and BOJ “will ensure that the Fed stays on hold for a while”
• “It is difficult to see a sustained selloff in global rates in this environment”