Free Trial
AUSSIE 3-YEAR TECHS

(U2) Back Above Bear Trigger

AUSSIE 3-YEAR TECHS

(U2) Back Above Bear Trigger

USDCAD TECHS

Doji Candle Pattern

US TSYS

Real Yields Climb Vs. Nominals

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access
     US TSYS SUMMARY: Treasuries opened NY Fri narrowly mixed, flatter, as
N.Korea overnight fired missile, UK had subway terror blast; prices did not fit
usual safe-haven bid expectations. Next:8:30 am ET US Aug retail sales; MNI poll
median est 0.1%, 0.5% retl sales ex-autos. - TOKYO: N.Korea missile sailed over
Hokkaido, Jpn & neared US's Guam before landing in Pacific; mild safe-haven bid
in Tsys but some later selling by trading accts, regional bks. Nikkei stk index
ended mildly higher. Unusual trading cld be as Jpn has Mon holiday, safe-haven
unwind speedier. 2way flow in Tsys and US swaps. 
- LONDON: Then a terror-tied explosion occurred in London subway, 18 injured.
But Gilts turned lower as BOE Vlieghe hawkishly urged future UK rate hike; also
pressured Tsys. Sources cited foreign central bank selling in 2s and 5s,
regional bk buying 5s and 10s. Some hope to buy Tsys, others to sell strength. 
- OVERNIGHT REPO: Tsy 5s, 7s and 10s tight. 
- US SWAPS: mildly tighter. 
- EURODLR FUTURES: Mildly lower. 
- HIGH-GRADE US$ CORPS: No issuance set today.
GILT SUMMARY: Gilts have taken another large knock lower, this time following
rather hawkish comments from Bank of England MPC member Gertjan Vlieghe, a known
dove, spurring rate hike expectations for November. 
- This time it is the 2-/10-year part of the yield curve that has come under the
most pressure and in-turn bear flattening the 10s/30s part of yield curve. 
- 10-yr Gilt yield 1.289%, up 6.2 bps on day.
- Gilts opened marginally lower as markets continued to digest the step-up in
BoE hawkish rhetoric Thursday, with some banks seen bringing forward calls for a
25bp rate hike at the next MPC meeting in November. 
- Gilts then spiked lower in knee-jerk reaction to hawkish Vlieghe comments --
Right time for rate hike may be in coming months. Plus in Q&A said he sees
tightening more than just reversing August cut. 
- Real yields in the 5-/10-year area have taken an even heavier battering, with
5-yr and 10-yr beakevens 7bp and 6.5bp tighter at 2.985% and 3.04%respectively.
While 5-yr swap spreads are over 6bp tighter at 32.1bps.
EGB SUMMARY: An eventful morning with a North Korean missile, a terror incident
on the London Underground (thankfully no fatalities) and a couple of central
bank speeches that moved the needle. 
- The reaction to the Korean missile was not significant as it seems the market
has become immune to such incidents. However, Bunds spiked on the news of an
explosion on a London underground but the big move of the day was linked to a
speech by a dove on the Bank of England, Vlieghe who appeared to endorse a near
term rate hike and later was quoted as saying that a tightening of monetary
policy might need to rise more than once if the economy develops as expected. 
- Gilt yields are 7-10bp higher today. However, the ECB's Lautenschlaeger from
the Bundesbank also put in a hawkish speech soon after Vlieghe and the Bund was
punished further, even if a hawkish speech by Lautenschlaeger is not so unusual.
- The rise in EGB yields has been led by the belly, with the Obl +3.2bp, the
Bund yieled up 1.6 bps to 0.426%. Peripherals are outperforming. 
- France announced the bonds and sizes for next Thursday's auction and Belgium
gave the size for their auction on Monday. There was no important data.
--MNI New York Bureau; tel: +1 212-669-6432; email: sheila.mullan@marketnews.com
[TOPICS: MNUEQ$,M$U$$$,MR$$$$,M$$FI$,MN$FI$]

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.