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Bear steepening in core FI

  • Core fixed income has moved lower this morning with USTs, German and gilt curves bear steepening. There was no real obvious trigger to the moves, but it was a broad cross-asset move with equities moving higher concurrently.
  • There has been downward pressure at the margin after a report from the IMF which suggested a number of options for the BoJ including raising the 10-year target or shortening the yield curve target as options.
  • Looking ahead to later today we will receive the first print of US Q4 GDP alongside December durable goods and weekly jobless claims data. We will also receive US new home sales data. The bar is high to change the outlook for next week's FOMC meeting where markets currently price 26bp.
  • TY1 futures are down -0-4 today at 115-00+ with 10y UST yields up 3.1bp at 3.475% and 2y yields up 1.8bp at 4.146%.
  • Bund futures are down -0.32 today at 138.04 with 10y Bund yields up 3.5bp at 2.186% and Schatz yields up 2.3bp at 2.541%.
  • Gilt futures are down -0.28 today at 104.89 with 10y yields up 5.1bp at 3.291% and 2y yields up 4.4bp at 3.418%.

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