HALISTER1: UST MORNING CALL: ‘Strongly Consider Going Neutral’

UST MORNING CALL: ‘Strongly Consider Going Neutral’

(Bloomberg) -- With overbought momentum “showing signs of turning bearish,” people with long or overweight positions “should strongly consider going neutral here,” RBS strategist John Briggs says in note.
  • “This is not a call to be short,” which “opens you up to potential corrective gains” as well as negative carry
  • Other observations from strategist morning notes:
  • BMO (Aaron Kohli): “As the rates market and risk assets are at the beck and call of the crude oil market, news of a potential output freeze have helped support prices”
  • CRT (David Ader): “Market technically looks overbought and we’re okay with booking profits”
    • “Yields have moved low enough and stochastics pressed far enough into overbought territory that a consolidation or modest pullback is warranted”
  • FTN (Jim Vogel): “Yields remain in lockstep with an increasingly skeptical view about the ability of the global economy to withstand interest rate normalization,” and “that’s both due to recent consumption trends and the difficulty in recalibrating normal after nearly a decade of low rates”
  • Marty Mitchell (independent): “Market flows often are not all that impacted by the minutes because they don’t offer anything more than we already know,” and “that is probably going to be even more of the case today given that Yellen was already decidedly dovish in her more recent speech”
  • Seaport Global (Tom di Galoma): “Expect today’s FOMC minutes to lean on the dovish side however, new corporate bond supply hedging may play a larger role on short-term direction of rates than Fed policy”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
John Briggs (RBS Securities Inc)
Aaron Kohli (Bank of Montreal)
David Ader (CRT Capital Group LLC)
Jim Vogel (Ftn Financial)
Marty Mitchell (The Mitchell Market Report LLC)

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