Halister News

(Bloomberg) -- Treasuries extend gains overnight following yday’s Fed meeting; 2Y underperforms, paring post-FOMC advance.

• Following FOMC, continue to favor 5Y, outright and on the yield curve via 2s5s30s butterfly; prefer butterfly over 5s30s steepener, given risks around the upcoming EU referendum, Morgan Stanley says in client note
• JPMorgan was the outlier among banks this week in terms of analyst calls, with most others bullish on USD rates duration
  • Stop out of tactical short duration position initiated last week, turn neutral on Treasuries, JPMorgan says in client note
  • 10Y yields could decline 10-12bps on a Brexit outcome, “remain” would push yields just 5-7bps higher: JPM
• RBS says in client note that the market is extended in technical momentum; however, the U.K. referendum prevents any thoughts of going short; instead, like paying 50% Dec. meeting date OIS, look to get to 100% post-referendum
• Fed needs CPI to stay strong; any weakening today would help rates go lower, faster, encouraging further flattening; 30Y yields testing significant resistance at 2.38%, lows seen in Feb., BMO says in client note
• Technicals:
  • Resistance: 132-17+ (Feb. 11 high); 132-24 (pivot r2)
  • Support: 132-00+ (June 15 mid price); 131-18 (June 15 low)