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US OUTLOOK/OPINION

GS: Payrolls Doesn't Change Faster Taper & First Hike In June Call

USDCAD TECHS

Bull Theme Remains Intact

US TSYS

Strong Stocks, Rebound for Oil Weighs on Tsys

EURJPY TECHS

Trend Signals Still Point South

AUDUSD TECHS

Stabilises Off Lows

BTPS
BTPS: VIEW: HSBC think "the regime of bull steepening may be at an end: the vol.
of the entire curve has fallen, particularly at the shorter maturities. This
implies that the 2-10-year slope should start to bull flatten if vol. continues
to fall. Alternatively, if there is a severe enough shock to disrupt this
normalisation trend, the curve should bear flatten as the short end becomes more
vol. This suggests that a 2-10-year flattener could perform in a range of
scenarios. We think the 10-year has lagged the move, and there is room for it to
catch up. The structural factors of PEPP & the moves towards fiscal support on
an EU-wide level, should all tend to compress spreads. Economic recovery could
act as a tailwind, but experience has shown that the effect of ECB stimulus
tends to outweigh even severe economic downturns. The extreme -ve carry of this
flattener made it unpalatable to most investors before now, even as the curve
re-steepened. The flattener trade still carries negatively, but with a more
manageable 6bp/3m it should easily be overshadowed by the potential for falling
yield at the 10-year point." They look to enter a short BTPS 1% 07/22-long BTPS
0.95% 8/30 spread at 126bp today, targeting 106bp with a stop at 136bp.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com