HALISTER1: Treasuries Remain Higher; 10Y Yield 1.625%

Treasuries Remain Higher; 10Y Yield 1.625%

(Bloomberg) -- Benchmark yields lower by 2bp-3bp, with 5Y below closing levels since 1Q 2015 as 10Y yields of Japan and U.K. fell to record lows and global equities dropped.
  • UST 5Y yield fell as much as 3.6bp to 1.131%, lowest since Feb. 10
  • UST 10Y yield declined as much as 2.9bp to 1.611%; YTD low was 1.529% on Feb. 11
    • “Looks poised” to move below 1.60%, with the Feb. 11 low “acting as a magnet,” independent strategist Marty Mitchell said in note
  • Analysts mostly bullish on USD rates given the global bond rally, U.K. EU referendum risks and poor economic data, though JPM recommends selling 5Y (see UST MORNING CALL)
  • Themes “are consistent” with “global growth headwinds, central banks biased for further easing, benign inflation, and of course, the risk of real economic and financial market disruptions from the British referendum on the EU,” CRT strategist David Ader said in note
  • TIPS extending last week’s underperformance of nominal USTs as WTI crude retreats further from Wed.’s YTD high close; breakeven rates (mkt-based inflation expectations) narrowed by 1.5bp-3bp for most issues, 10Y and 30Y breakevens to lowest levels since mid-March
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
David Ader (CRT Capital Group LLC)
Marty Mitchell (The Mitchell Market Report LLC)

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