Bullish bond market takes a break

- FI Strategizer: "Next week, the data calendar will be light on both sides of the Atlantic; better-than-expected NFP should thus remain the main driver of bond performance, leading to a further moderate rise in yields. Supply in the US and German data (likely to confirm the resilience of the German economy) should put additional moderate pressure on bonds."
- EU Portfolio Strategy: "We would return to a neutral duration, ready to lengthen the active duration again heading towards the FOMC meeting on 21 September. Cross-country wise, we cut back a little on Germany after the positive NFP and we increase France and Belgium. We also reduce Spain in favor of Portugal."
- MM: "The ECB announced the extension of full allotment until 18 Jan-11, meeting market expectations. It also announced three more 3M LTROs but with the rate linked to that of the 1W MROs, to stress that the exit from extraordinary liquidity measures is still in place."
- Trade Idea: "OT Apr37 has strongly richened vs. OT Jun20, and the two bonds now offer almost the same yield. One reason is that Portuguese supply on the 30Y has been very scarce in the last year. The flattening on the Portuguese curve seems overdone and we would sell the 30Y."
- Supply Corner: "In EMU, next week redemptions will be abundant (EUR 48bn), coming from core and from BTPei Sep10. Scheduled supply, mainly from core, is subdued. Portugal will sell 3Y & 10Y. The abundant liquidity creates a window of opportunity for unscheduled supply."
- Inflation: "The flash estimate for eurozone August HICP came in at 1.6% yoy. In the near-term, we expect inflation to stay subdued and our yearend target remains around 1.8%."
-FX Strategizer: "Trading on FX majors should remain exposed to daily or at best weekly volatility in the coming days. Even after better-thanexpected US labor data, swings in global risk aversion and the stock market performance will continue to set the tone."
- EUR: "The EMU growth potential will not be strong enough to completely offset the outstanding budget crisis. The EUR-USD strength should ease and the next key resistance level at 1.3125 won’t be broken easily."
- JPY: "Once the impact of the US labor data has abated, JPY bulls will challenge again the Japanese authorities. If inaction persists, USD-JPY could still fall towards 80, which could drag EUR-JPY to just above 101."
- GBP: "Global risk factors should continue to overshadow bleak data at home primarily for cable: risks of a new break towards 1.53 thus remain concrete, while EUR-GBP should remain capped above 0.8350."
- Pacific Rim: "The healthy performance of the Australian economy should not be enough to spur another rate hike at the RBA meeting on Tuesday. AUD-USD rally through August peaks above 0.92 should be taken with caution. NZD-USD might have difficulties breaking above 0.73."
- Nordics: "EUR-SEK and EUR-NOK were unable to crack key levels like 9.30 and 7.85, despite a more risk-prone scenario. Hence, a short-term bounce of these EUR cross rates may be cautiously explored"

Unicredit Curves & Crosses 20100903

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