HALISTER1: UST 10Y Yield May Extend Rise After Stimulus Clarified: Barclays

UST 10Y Yield May Extend Rise After Stimulus Clarified: Barclays

(Bloomberg) -- Barclays sees 10Y U.S. Treasury yields trading at 2%-2.25% in near term before they drift higher and recommend shorting 2Y sector and 5s10s30s fly, analysts including Rajiv Setia, write; view term premia higher under Trump, reflecting higher inflation risk premia, uncertainty.
  • Near-term 10Y view maintained until more clarity on Trump fiscal stimulus extent
  • Recommend short 2Y USTs at 0.89%; front-end yields not yet fully repriced, see 1% Fed funds by mid-2018 as too low
  • Recommend shorting 5s10s30s fly; in post-election market repricing 5s10s should have steepened more than 10s30s, view 10 years as “long enough” for effect of potential higher neutral rate to be fully reflected
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Rajiv Setia (Barclays PLC)

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