Halister News

(Bloomberg) -- Investors should buy UST 7Y “on a knee-jerk bearish move” in reaction to either BOJ or FOMC outcomes, taking 50% risk at 1.50%, adding 50% at 1.65%, strategists led by John Briggs say in note.

• Call is based on expectation that BOJ “will disappoint overly heightened market expectations for a ‘reverse- twist,’” and instead cut depo rate 10bp-20bp, expand QE and extend deadline for meeting 2% inflation target
  • Kuroda won’t commit his credibility to idea that higher long-END rates advance progress toward inflation target
• FOMC will leave December in play via dot plot, with “little risk to the U.S. bond market,” as market-implied odds for hike this year are ~55%
• Following the decisions, investors “will look to deploy cash” at higher yields than they could a few weeks ago, while markets will shift focus to upcoming month that is “heavy with political risks”