HALISTER1: U.K. Swap Curve Flattening, Pay 4y1y vs Receive 5y5y: SG

U.K. Swap Curve Flattening, Pay 4y1y vs Receive 5y5y: SG

(Bloomberg) -- See no near-term catalyst to drive short end yields to still richer levels and further buying is likely to focus further out along the curve, says Societe Generale strategist Jason Simpson, in a client note.
  • Pay 4y1y GBP swaps against receiving 5y5y
    • Shorter tenors may have rallied more but the 4y1y is less than 10bp from its historical lows and therefore looks the most stretched of the short end forward rates
    • 5y5y rate has lagged the move lower at the short end and remains over 30bp off the Jan. 2015 lows
  • Continued flight-to-quality represents a key risk
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jason Simpson (Societe Generale SA)

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