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A Touch Firmer Into Europe


Cash Tsys are flatter as we head into London hours, with the space trading 0.2-2.7bp richer across the curve, as end-of-year focus remains zoomed in on fiscal developments in DC. T-Notes last +0-03 at 137-30+, sticking to a 0-05+ range thus far, recently firming on the back of a RTRS source piece which suggested that "the United States is set to add dozens of Chinese companies, including the country's top chipmaker SMIC, to a trade blacklist on Friday." There has also been some interest in rebalancing flows into year-end (which are seen as equity -ve, bond +ve), in addition to some worry re: the potential delay of a fiscal stimulus package in DC on the back of disagreement surrounding the re-appropriation of unused funds from the Federal Reserve's support schemes.

  • As a reminder, the cash Tsy curve steepened a little on Thursday, with 30s cheapening by 2.5bp on the day, although there was little in the way of overt headline catalysts to drive the move, as participants pointed to continued focus re: U.S. fiscal developments and Brexit matters (despite some posturing from top level officials re: the latter), while the S&P 500 registered another fresh all-time high. Local data was mixed, with weekly jobless claims and the latest Philly Fed survey disappointing, while the latest housing starts and building permits prints topped exp. On the fiscal front, a late Thursday tweet from Senate Majority Leader McConnell noted that "Productive conversations remain underway on COVID-19 relief. But Congress must not slide into treating these talks like routine negotiations at our routine pace. This could not be more urgent. The Senate's going to keep working right through the weekend until we get an outcome."
MNI London Bureau | +44 0203-865-3809 |