STRATEGY
- US Treasuries
- Long 10T towards 2.10%. The coming week's drivers include Fed-speak and $56 billion worth of government auctions. However, we fear driving force will be geopolitics, which should support UST.
- Short 2T as spread versus the FFR is tight while debt ceiling risk and balance sheet run-off rhetoric may soon spook the short-end of the curve.
- Malaysia govvies
- Long 7- and 15-year MGS. Assuming no hawkish bias from Bank Negara Malaysia this week, and after recent gains had been led by the front-end, likely interest should be on bellies of the curve (7-year MGS) and far end (15-year MGS). The lagged 7- and 15-year MGS should have 3-5bps upside in the immediate term horizon.
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