Reasons to be bearish…

- Overview: "Bond yields now look low by almost any measure, fuelled by cheap funding, QE and strong seasonal support. However we think additional QE is now fully priced and that the technical backdrop is turning."
- US Rates Strategy: "10yr Treasury yields are 30bp below our view of fair value, but we are cautious due to strong momentum; we prefer to be long TIPS breakevens and short the 5yr Treasury butterfly, to position for higher yields."
- "We analyze the 10yr-30yr Treasury curve and conclude that despite its recent volatility it appears fair."
- Euro Rates Strategy: "We expect EMU spreads to continue to register high levels of volatility, with little scope for retracement in the weaker peripheral markets in the near-term. As we enter September, and perhaps a return to more liquid markets, we suggest 10s30s euro steepeners look appealing."
- Sterling Rates Strategy: "We recommend a 10s-30s GBP conditional flattener via payers. We also like boxing flatteners on the gilt curve with steepeners on the Bund curve or buying 30yr gilt asset-swaps versus Bunds."
- Global Inflation Strategy: "We recommend a long position in 5yr, 5yr forward TIPS break-evens as a view on the Fed. Euro break-evens have widened sharply; we are inclined to fade the move and see better value in TIPS."
- APAC Rates Strategy: "Base case scenario revisited in Japan after the recent sell-off."
- "Update to Semi-Government Borrowing Program in Australia."


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