Monday, 21 June, 2021
EGB strat pieces round up
EGB strat pieces round up
Strategists at Barclays like buying Spanish 10-year bonds as a tactical trade, while peers at Santander prefer buying bonos against Portuguese debt. BNP favors buying 20-year French green bonds against swaps.
Barclays: (strategists including Cagdas Aksu)
Recommends tactically buying 10-year Spain after last week’s sell-off, given the favorable supply-demand backdrop ahead, light positioning and dovish ECB, while the hawkish Fed is now out of the way
Santander: (strategists including Antonio Villarroya)
Recommends buying 7-year Spain versus Portugal given bonos now offer an extra pick-up following recent PGB out performance, which should reverse on concerns the ECB will slow its bond- buying pace
BNP: (strategists including Eric Oynoyan)
Recommends paying 5-year on Eur 2s5s10s OIS fly given the risk premium around this tenor remains too low and is expected to extend its underperformance
HSBC: (strategists including Chris Attfield)
Recommends buying 1Y4Y France as the “no rate hikes, no capitulation trade” given short-end semi-core curves are too steep relative to the trajectory for ECB policy rates, while the trade should perform via roll-down over the next year
Citigroup: (strategists including Andrea Appeddu)
Recommends paying 5y5y USD swap versus 5y5y Eur peer given the spread tightening looks overdone and can only extend if further ECB rate hikes in 2023 are priced in
Danske: (strategists including Jens Peter Sorensen)
Recommends buying 5-year Ireland versus Finland given the latter is expected to syndicate a bond in this tenor while the former doesn’t tap the front-end often and a syndication is expected in the longer-end for a possible green note
Goldman Sachs: (strategists including George Cole)
Recommends paying 5-year on Eur 2s5s10s OIS fly given the risk premium around this tenor remains too low and is expected to extend its underperformance
UBS: (strategists including Rohan Khanna)
Recommends receiving the belly of the Eur 2s5s10s fly to fade the swift cheapening given the Fed’s hawkish shift from a QE based guidance to an interest-rate policy based guidance won’t be replicated by the ECB, which still has APP when PEPP ends
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