Halister News

(Bloomberg) -- Continue to like 10Y bunds as outright long, prior target of -0.10% met this morning, move target to -0.40%, writes RBS strategists including Giles Gale in a client note.

• Expect BOE to ease further, look for 25bps cut in July and August; U.K. 2Y may fall to 0% (prior close 0.52%)
  • 1% in 10Y Gilts to be breached shortly, may hit 0.75%
  • Maintain long July Sonia, 10s30s flatteners in bunds
• Expect 10Y BTP to test 2% outright; fate of Italian bond market to be determined by domestic investors, ECB action
• If European financial markets remain under heavy pressure, rate cuts, accelerated QE will eventually be back on the table
• SPGBs to hurt less than BTPs as early selling to filter through IK futures; expect SPGBs to underperform later in the session ahead of Sunday’s elections