Halister News

(Bloomberg) -- Prefer Treasuries as the Fed just took 50bps worth of rate hikes off the curve over the next two years, offering support to long end of the U.S. curve, Societe Generale cross-asset analysts led by Alain Bokobza write.

• USTs offer yield pickup and protection, as the year-end should be rich in political events likely to trigger market volatility, while fiscal support in the euro area and Japan may trigger a repricing at the long end of the curve
• Still see virtue in an emerging-market exposure as the Fed continues to confirm a shallow tightening cycle and as the economic situation in China is more stable
  • Prefer bonds to equities in EM as real yields and monetary policy outlook remain supportive of EM bonds
• Keep maximum exposure to inflation-linked bonds in U.S., U.K. and the euro area awaiting further normalization of inflation prints and repricing of inflation expectations
  • These are too low relative to fundamentals in the U.S., while the impact of higher energy prices will finally be felt in the euro area
• GBP is the key currency to short given the clear need for the BOE to do more monetary stimulus to stimulate the economy