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A little lower

BONDS
  • Core fixed income has been grinding lower this morning with gilts and Treasury futures both marginally lower than yesterday's intraday lows.
  • UK labour market data showed wage growth a little stronger than expected but the rest of the report was mixed - pointing to early signs of a (very small) slowdown in the labour market (from very tight levels).
  • The German ZEW survey also showed a big increase in its expectations component, moving into positive territory for the first time since February.
  • Looking ahead there are no major US data releases today but we will receive Canadian CPI and the market will have one eye on UK inflation data due tomorrow as well as tomorrow's slew of US data releases (retail sales, PPI, IP among the highlights).
  • We have seen decent gilt (new 3-year) and Bobl (new 5-year) auctions in larger sizes than normal this morning without too much market impact.
  • TY1 futures are down -0-7 today at 114-17+ with 10y UST yields up 4.6bp at 3.551% and 2y yields down -0.5bp at 4.230%.
  • Bund futures are down -0.27 today at 137.94 with 10y Bund yields up 1.5bp at 2.186% and Schatz yields up 1.9bp at 2.579%.
  • Gilt futures are down -0.42 today at 103.53 with 10y yields up 4.5bp at 3.427% and 2y yields up 6.3bp at 3.546%.

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