Mizuho expect "periphery outperformance to.....>

EGBS: Mizuho expect "periphery outperformance to continue today, and are neutral

on Bund. The ECB will be looking at an improved growth outlook, but a worsened

inflation picture at the same time. This should prevent central bank

accommodation being removed prematurely, and we see limited potential for curve

steepening driven by inflation exp. The perception that there is not too much

room to run in risk assets should make for a lack of motivation to sell out of

rates products, especially those with +ve yield/carry. For rates, there should

be ongoing demand for value. Our main themes are unch. - a long duration bias,

and a long spread bias with the yield grab backdrop becoming even more

prevalent. Now that the market will be anticipating a vast amount of EU issuance

from next year, there's much incentive to pre-empt this move with high-beta SSAs

compressing to lower-beta names. We have strong conviction for EUR SSAs to

normalize relative to EIB. Expressions in Laender, IBRD, as well as KFW all look

attractive. The summer is now less interesting from an event risk perspective.

Investors should therefore be putting on carry trades with a 2-4 week horizon."