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A Little Firmer As BoJ Holds The Line

BONDS
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Core global FI markets hold onto the bulk of their early Friday rally, although JPY FX activity has generated far greater interest.

  • A lack of hawkish offerings from BoJ Governor Ueda helped bonds to rally around the European cash open.
  • Steady to slightly lower inflation expectations in the ECB’s latest consumer expectations survey wouldn’t have harmed the bid.
  • Bund futures are a little off session highs, last +20 or so at 130.00. The German cash curve has bull flattened, with yields 0.5-2.5bp lower.
  • OATs are little changed to a touch tighter vs. German peers, as participants await potential French sovereign rating updates from Fitch & Moody’s. The recent French fiscal deterioration has fed into OATs, with the impending rating updates having the potential to move the market on Monday (we will provide more colour later).
  • Peripheral paper is generally tighter to Bunds, with a light rally in EUR STIR markets, some tightening in benchmark credit spreads and the recovery in equities since yesterday’s European close feeding in.
  • Gilt futures are +15 or so at 95.85. Bulls failed to force a break above 96.00, with the bearish technical backdrop intact.
  • Cash gilt yields are 1-3bp lower across the curve, with some flattening seen.
  • Light dovish moves are seen in GBP STIRs.
  • The European & UK calendars are light from here, which will leave focus on cross-market spill over and macro headline flow.
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Core global FI markets hold onto the bulk of their early Friday rally, although JPY FX activity has generated far greater interest.

  • A lack of hawkish offerings from BoJ Governor Ueda helped bonds to rally around the European cash open.
  • Steady to slightly lower inflation expectations in the ECB’s latest consumer expectations survey wouldn’t have harmed the bid.
  • Bund futures are a little off session highs, last +20 or so at 130.00. The German cash curve has bull flattened, with yields 0.5-2.5bp lower.
  • OATs are little changed to a touch tighter vs. German peers, as participants await potential French sovereign rating updates from Fitch & Moody’s. The recent French fiscal deterioration has fed into OATs, with the impending rating updates having the potential to move the market on Monday (we will provide more colour later).
  • Peripheral paper is generally tighter to Bunds, with a light rally in EUR STIR markets, some tightening in benchmark credit spreads and the recovery in equities since yesterday’s European close feeding in.
  • Gilt futures are +15 or so at 95.85. Bulls failed to force a break above 96.00, with the bearish technical backdrop intact.
  • Cash gilt yields are 1-3bp lower across the curve, with some flattening seen.
  • Light dovish moves are seen in GBP STIRs.
  • The European & UK calendars are light from here, which will leave focus on cross-market spill over and macro headline flow.