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Another Leg Lower Amid Little Headline Flow

EGBS

Headline flow remains light during the latest leg lower in EGBs. First support in Bund futures (134.87) remains some distance away, with the contract trading as low as 135.20 in recent trade.

  • More broadly, core global FI bond futures trade within ranges observed during recent sessions, with the observance of a U.S. holiday thinning out liquidity.
  • A reminder that the initial pressure for core FI markets seemingly stemmed from the digestion of weekend/late Friday ECB-& Fed-speak, which helped facilitate an unwind of Friday's U.S. PPI-induced rally.
  • Participants also had to balance the impact of no change in the interest rate applied to the latest round of PBoC MLF operations (BBG survey consensus looked for a 10bp cut) vs. a larger-than-expected net liquidity injection via the same operations.

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