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J.P.Morgan Recommend Bobl Longs And Receiving 1Yx1Y €STR

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J.P.Morgan note that their “bias is to trade duration tactically from the long side over the near-term as we expect intermediate German yields to stay range-bound (5-10Y in 2.30-2.60% range) until the confidence around the disinflation process builds up with the passage of time.”

  • They go on to write “with 5-10Y Germany yields near the upper-end of our expected 2.30-2.60% range, we find the risk-reward attractive to enter tactical long duration exposure via Bobls”
  • They also recommend receiving 1Yx1Y €STR “with some pull back in PMIs and national inflation data prints broadly in line with our projections, our baseline view of a September ECB rate cut remains on track.”

Fig. 1: German 5- & 10-Year Yields (%), Horizontal Line’s Denote J.P.Morgan’s Expected Tactical Trading Range

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J.P.Morgan note that their “bias is to trade duration tactically from the long side over the near-term as we expect intermediate German yields to stay range-bound (5-10Y in 2.30-2.60% range) until the confidence around the disinflation process builds up with the passage of time.”

  • They go on to write “with 5-10Y Germany yields near the upper-end of our expected 2.30-2.60% range, we find the risk-reward attractive to enter tactical long duration exposure via Bobls”
  • They also recommend receiving 1Yx1Y €STR “with some pull back in PMIs and national inflation data prints broadly in line with our projections, our baseline view of a September ECB rate cut remains on track.”

Fig. 1: German 5- & 10-Year Yields (%), Horizontal Line’s Denote J.P.Morgan’s Expected Tactical Trading Range

Keep reading...Show less