REPEAT: NIRP?!? No going to.......>

FED FUNDS FUTURES: REPEAT: NIRP?!? No going to happen, UBS strategists say. 

- UBS said "there are 4.7T reasons why negative rates are much more problematic

in the US" as the MMF industries "business model would come under severe strain

if rates were negative." Reworking the MMF industry would be extremely

disruptive" and time consuming. "taking rates negative would mean a tightening

of financial conditions until the market structure evolved to a bank financed

framework."

- UBS posits the rally in FF is a likely dealer or fund stop out of positions

vs. bank portfolios. "Let's say a bank has assets where the interest rate can't

go through 0%. If they have that asset hedged with OIS or a LIBOR swap that can

go through 0%, there is a mismatch if rates go negative." W/some dealers as

counterparty, they hold "significant exposure to negative FF," while unwinds

"can temporarily push futures into negative rates that seem highly unlikely."

Decoupling should be short term, however, as "it is exceedingly difficult to

hold rates at those extreme levels for very long."