JPMorgan Econ FI-Longing for some shorts The long-end technical looks more fr...-106294958

JPMORGANNorthAmericaCreditResearch01February2024LongingforsomeshortsThelong-endtechnicallooksmorefragilenearterm;afewtradeideastogetshort•Thelong-endhasbeenleadingtherestofthemarkettightersincetheFedUSHighGradeStrategyfinishedhikingasyieldsarehistoricallyattractiveandHGcorpsareoneoftheNathanielRosenbaum,CFAACfewliquidsourcesoflong-endfixedincomeproduct.Thisshouldremainthecasesolongasyieldsdon’tdropsignificantlyfromcurrentlevels.(1-212)834-2370nathaniel.rosenbaum@jpmorgan.com•However,the10s30sspreadcurvelookstooflattousatthisjuncture.IthasEricBeinsteinflattened9bpYTDtoanearrecordlowof14bp.PartofwhatdrovethismostrecentflatteningwasthattherewasanunusualimbalanceinJanuarybetween(1-212)834-4211thematurityofdemandrelativetosupply.eric.beinstein@jpmorgan.com•WethinkwillcorrectitselfinFebruaryaslong-endissuancepicksup,SilviMantriespeciallynowthatrateshavestartedtorallypostthemostrecentmoredovish(1-212)834-7239Fedmeeting.Thislong-endissuancepickupistypicalinFebruaryandissilvi.mantri@jpmchase.comperhapsreflectedinithavingbecomeaseasonallyweakmonthoverthelastJ.P.MorganSecuritiesLLCfewyears.Investorsappeartohavestartedsellingdownlong-endpaperinrecentdaysinpreparation,withdealerinventoriesatthelong-endsignificantlyhigherasaresult.•Webelievethereisagoodrationaltobeshortabasketoflong-endpaperhereinspreadtermsandweaccor...