Apr
26
Aussie Funding Costs Start to Fall, Breathing Life Into Old Bets
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Strategists return to steepener trades, bets on shorter rates
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Front-end yields are near top of trading range, Citigroup says
Australian bank funding rates have started to turn lower, giving traders the confidence to return to long positions in the front-end of the local rates market.
Strategists have issued a flurry of recommendations to go long on shorter-dated interest-rate swaps, either outright or versus longer-maturity ones, betting floating rates will fall as the Reserve Bank of Australia stays on hold. These positions were upended earlier this year as surging three-month bank borrowing costs pushed up shorter-end rates…
