HALISTER1: UST MORNING CALL: Treasury Declines Seen as Buying Opportunity

UST MORNING CALL: Treasury Declines Seen as Buying Opportunity

(Bloomberg) -- Focus on U.K.’s EU referendum vote outcome; Treasuries slide with gilts overnight as stocks rally; some analysts see it as a buying opportunity.
  • Any selloff toward top end of 1.70%-1.75% range will be well-supported as underlying domestic economic concerns aren’t Brexit-related, wouldn’t jump on a selloff as U.S. has own issues to deal with, RBS’s John Briggs writes in client note
  • View back-up in yields as a buying opportunity, particularly as 10Y approaches 1.80%, given Yellen’s dovish testimony along with relatively high-yielding govt debt and continued softening of inflation expectations, Seaport Global’s Tom Digaloma writes
  • U.S. rates discount 75% of recent payroll decline, 90% of FOMC outcome; no visible catalyst for upside break in stocks; commodities not flashing inflation warnings, buying bonds here is the smart move, FTN’s Jim Vogul writes in client note
  • Remain neutral duration as outcome of EU referendum still appears too close to call, JPMorgan’s Jay Barry writes in note
  • Technicals:
    • Resistance: 131-20 (June 20 high); 131-26 (June 17 low); 132-03+ (June 16 low)
    • Support: 130-16+ (61.8% Fibo of May 31-June 16 rally)
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Jay Barry (JPMorgan Chase & Co)
Jim Vogel (Ftn Financial)
John Briggs (RBS Securities Inc)
Tom Di Galoma (Seaport Group LLC/The)

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