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Away From Lows, Month-/Quarter-End Eyed

BONDS

Core global FI markets move away from session lows as the totality of the U.S. data is assessed.

  • A modest mark lower in final Q4 core PCE data seems to be driving the bid, although tomorrow’s February PCE release will be of much more interest to markets.
  • Powell previewed the Fed's Feb PCE expectations in the post-meeting press conference, saying core was estimated at "well below 30 basis points" (which is taken to mean 0.26-0.27% M/M) so that will probably anchor expectations for Friday. Some have suggested that January’s core PCE may be revised higher.
  • The bond rally could also be supported by front running quarter-end rebalancing flows as well (those flows are seen as +ve for bonds and -ve for equities).
  • A reminder that European and UK monthly index extensions are average to large, which could provide support to those markets this afternoon.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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