EUR / GBP Fx & yields: staying short sterling - Nomura

Analysts at Nomura explained that they have updated their rates view.

Key Quotes:

"Having taken profits on short positions in mid-July we re-enter them now. We do this in outright terms and also on a cross-market basis against the euro area."

"The supply calendar released today shows there will be no ultra issuance next quarter. We see a good chance of LDI demand coming back and a potential squeeze of the long-end. We recommend short 10yr vs. long 68s as the best trade to profit from this. In FX we continue to watch the politics and the data for the next risk event that could hurt our long EUR/GBP 0.92/0.94 call spread."

"But the market continues to follow its Brexit bias in its commentary concerning both the Brexit talks and prevailing UK data. The potential for a positive surprise would be from the EU side, if it signals openness for the start of future trade talks for example. For the next few months that may prove to be wishful thinking and is why we remain short GBP."