HALISTER1: UST MORNING CALL: ‘Yields Can Drift Higher’

UST MORNING CALL: ‘Yields Can Drift Higher’

(Bloomberg) -- “With sentiment in the hands of the ECB and oil traders, yields can drift higher because charts insist both oil and stocks are historically cheap,” FTN strategist Jim Vogel says in note.
  • “The combination of risk, inflation and real rates point to the 10-yr at fair value between 1.75%-1.90%,” and “risk- weighted analysis of the Fed suggests near-term flattening remains the bigger risk for bonds”
  • Other observations from strategist morning notes:
  • BMO (Aaron Kohli): “Yields are likely to move higher this week as a mix of repositioning and stronger-than-expected data are likely to keep pressure on rates”
    • “Belly will be the weakest part of the curve as the front-end has already underperformed in the rally and short positioning has mostly repaired”
  • CRT (David Ader): “Market trades with a heavy tone as risk assets ‘behave’ better (confirmed by strong corporate issuance) and the data meanders without a compelling sway to recession risk or acceleration”
  • Marty Mitchell (independent): “We maintain that the underlying bid will reassert itself on approaches of the 2.00% level on the 10yr as the longer-term momentum studies reach oversold levels”
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
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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