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FED

NY Fed Operational Purchase

US TSY OPTIONS

10Y Put Spd Unwind

US 10YR FUTURE TECHS

‌‌(Z1)‌‌ Focus Is On Support

UN

Biden: We Are Not Seeking A New Cold War

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Expiries for Sep22 NY cut 1000ET (Source DTCC)

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Core fixed income is now little changed to yesterday's close, but this masks a decent move seen in gilts on the open.

  • UK CPI came in higher than expected at 3.2%Y/Y (2.9% exp) with core CPI at 3.1% (2.9% exp). Part of the increase relative to last month's print was due to the base effects of last August's depressed CPI print due to the "Eat out to help out" scheme. However, this was already considered in the expectations and the surprises were generally fairly broad-based. Gilt futures hit a low of 127.79 for the day around 10 minutes after the open but have since recovered to around 128.02 (not far from yesterday's close of 128.04).
  • BTP and GGB spreads have widened a bit today, but other EGB spreads are sitting fairly steady.
  • Today will see the inaugural EU bill auction with the EU looking to sell up to E3bln of 3-month bills and up to E2bln of 6-month bills.
  • The highlight on the data calendar ahead will be US industrial production while we are due to hear from the ECB's Schnabel and Lane.
  • TY1 futures are down -0-0+ today at 133-19 with 10y UST yields down -0.9bp at 1.276% and 2y yields unch at 0.208%.
  • Bund futures are up 0.03 today at 171.94 with 10y Bund yields down -0.1bp at -0.342% and Schatz yields up 0.1bp at -0.716%.
  • Gilt futures are up 0.01 today at 128.05 with 10y yields unch at 0.737% and 2y yields up 1.0bp at 0.238%.