FOREX: Goldman Sachs See USDJPY Bounce as Attractive Entry for Shorts
May-01 12:51
- According to Goldman Sachs, the dovish tilt to the BOJ meeting was tempered somewhat by Governor Ueda’s comments, that a delay to underlying inflation reaching their 2% target need not necessarily imply an equivalent delay to further rate hikes.
- GS continue to see the evolving US macro backdrop as the dominant driver for USDJPY. In their central scenario of weak but non-recessionary US growth, further downside in USDJPY is one of their highest conviction views. The believe the overnight rally offers more attractive levels for fresh shorts.
- GS also see Yen longs as an attractive hedge against a more significant risk-off or recessionary turn in US data, which they think this is best expressed as short AUDJPY from a tactical standpoint, and short USDJPY in the longer-term.
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EQUITIES: BNP put spread
Apr-01 12:49
BNP (19th Dec) 76/60ps, sold at 6.1 in 2.5k.
INFLATION: EUR 5Y5Y Inflation Swaps Back To Lowest Since Fiscal Shift
Apr-01 12:42
- As noted earlier, Eurozone STIR markets have reversed the hawkish reaction seen on yesterday’s Bloomberg ECB sources piece, aided in part by the Washington Post’s report on potential for 20% tariffs as part of broader concerns ahead of tomorrow’s reciprocal tariffs announcement.
- Yesterday’s hawkish reaction helped stop what had been a modest rise in 5Y5Y inflation swaps (~2bps to 2.125%), although currently at ~2.10% they have reversed that climb along with today’s rates rally.
- It leaves 5Y5Y inflation swaps at what would be the lowest close since the Mar 4 German and EU fiscal announcements, having been at 2.05-2.075% in the days shortly beforehand.
- Those fiscal plans saw idiosyncratic adjustments in EU long-term inflation swaps, narrowing the US-EUR spread from levels closer to 40bps to 16bp on Mar 5. Daily gyrations have more recently shifted back to seeing greater correlation with those in the US though, with a US-EU spread at 30bps +/- 3bps over the past week and a half.
EURIBOR OPTIONS: Call spread vs put
Apr-01 12:38
ERZ5 98.0625/98.25cs vs 97.75p, bought the cs for 2 in 10.5k vs 3.99k at 98.075.
