VIEW: HSBC enter a long 10-Year Dec '30.......>

GILTS: VIEW: HSBC enter a long 10-Year Dec '30 Gilt position at 20bp, targeting

-4bp, with a stop at 40bp.

- They note that while they "expect QE to be the first port of call as

additional easing is delivered, the BoE's current rapid pace of asset purchases

may not be viable over the long-run. After Governor Bailey this week confirmed

that his position on negative rates had changed and the BoE is considering them,

then if further stimulus is needed it seems the bar is now much lower. The risk

of negative rates potentially opens up a whole new, lower opportunity set for

where gilt yields could go. If Bank Rate actually went negative, the market is

likely to price in the possibility of even deeper cuts in the future. As we have

seen with the ECB, each cut may be promised to be the last, but this has not

ultimately proven to be the case. Gilts at the very short-end of the curve have

started to discount some chance of a temporary period of negative rates, but if

we moved closer towards a point of it happening, there is still plenty of scope

for yields to fall from here. In that scenario, we see best value in owning

duration outright"