HALISTER1: UST MORNING CALL: ‘Entering a Pivotal Point’ in UST Seasonals

UST MORNING CALL: ‘Entering a Pivotal Point’ in UST Seasonals

(Bloomberg) -- “We are currently entering a pivotal point” in UST seasonals where historically 10Y sector sells off between the Feb. and May refundings, CRT strategist David Ader says in note.
  • However, “seasonals are not the only influence at work in these markets and with the impact of stocks and oil still strong,” they “are more of an underlying factor, similar to issuance, that will come into play in calmer markets”
  • Other observations from strategist morning notes:
  • BMO (Aaron Kohli): “Early consensus around why rates are selling off this morning has to do with the building of expectations that bad data may be paving the way for more central bank stimulus”
    • Although, an overnight intraday graph suggests “crude is leading the rates and equity markets to higher levels,” and “it may be a melt-up or a short-squeeze that’s driving price action, rather than a view towards further stimulus”
  • Marty Mitchell (independent): “Continue to watch the 2yr yield as well since a closing yield above the 0.81% level will suggest higher front-end yields and a narrowing of the yield curve”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Aaron Kohli (Bank of Montreal)
David Ader (CRT Capital Group LLC)
Marty Mitchell (The Mitchell Market Report LLC)

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