HALISTER1: UST MORNING CALL: Bullish Bias, Add Longs in 5Y, RBS Says

UST MORNING CALL: Bullish Bias, Add Longs in 5Y, RBS Says

(Bloomberg) -- USTs edge higher in Asia following weak Australia CPI, then subdued session in London; belly of the curve outperforms.
  • Initiate long in 5Y USTs with 50% risk, looking to buy other 50% at 1.47% through FOMC meeting; maintain 5s10s cash steepener, RBS strategists including Blake Gwinn say in note
  • Take profits on longs in double-old 10s vs current 10s ahead of next week’s refunding announcement, JPMorgan strategist Jay Barry says in note; off-the-run 10s tend to outperform new 10Y notes after initial auction and through following months
  • Buy dips in USTs, Fed statement to show a dovish lean, yield curve may bull steepen as 5Y outperforms, writes Seaport Global’s Tom di Galoma in emailed comments
  • Technicals
    • Support: 129-02 (April 26 low), 128-31/128-26 (March 28 low, 76.4% Fibo of March 16 rally), 128-20+/128-22 (March 23 low, 100-DMA)
    • Resistance: 129-22+ (April 25 high), 129-25 (April 22 high), 129-29 (April 21 high), 130-02+ (April 20 mid price), 130-06/09+ (April 19 low, 21-DMA)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Blake Gwinn (RBS Securities Inc)
Jay Barry (JPMorgan Chase & Co)
Tom Di Galoma (Seaport Group LLC/The)

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