A Quick Recap Of Drivers For The Early Bid In Bonds

A quick recap of the likely drivers of the move away from session cheaps for core global FI markets:

• Gilt/UK STIR reaction to late Monday comments from BoE chief economist Pill re: market pricing of rate cuts in summer not being “totally unreasonable, at least to me… It is at that point you might consider or reassess, if nothing new has happened, where we are going to have to be.” Gilts outperform core peers across the curve as a result, with BoE-dated OIS moving in a dovish manner.
• Lower crude oil futures.
• The previously covered block buy in TY futures (~$199K DV01).
• We also remind of the dovish Aussie bond market reaction to the RBA rhetoric tweaks alongside the 25bp rate hike delivered in Sydney hours. Note the Tsy market reaction was limited at the time (03:30 London), but this dynamic won’t have done the bid any harm as London/European participants assess overnight developments.