/EGBS: CIBC head of rates strategy..........>

US TSYS: /EGBS: CIBC head of rates strategy Richard Gilhooly said market story

"doing the rounds is liquidation of bonds starting with EGBs after Tuesday's big

rally (don't know why they rallied so much Tuesday: ECB reinvestment data was

released for first time on Monday but did not seem out of whack with

expectations)." EGB selling led "yields up on Wednesday and up a lot" Thurs

"possibly linked to the crackdown in Saudi Arabia and selling of investments,"

he added. 

- He added Fri morning, only Bund German yields gained, while peripherals ylds

lower, but now "all are up 4bp+" so "continued liquidation there" and "obviously

Tsys followed suit. The steepening move is a function of yields: Fed is hiking

so 2y is stuck at 1.65%, flattening curve when long rates drop and vice versa."

- He adds bond liquidation could be tied too to Lebanon PM resignation "and

Saudi detention" of some high officials for alleged corruption "and Iran" worry

"as well as boosting crude oil prices. Nothing fundamental has changed, and if

anything, tax deal hopes are lower." He added they could be "unwinding Saudi

investments and cld be linked to the deteriorating situation with Iran."