BoJ Bid Still Felt, Although Move Relatively Contained

Core bonds continue to trade a little richer on the day, with the feedthrough from the dovish BoJ outcome and lower oil prices vs. levels seen at the European close still felt.

• U.S. Tsy yields see a ~3bp shift lower on the day, while TY futures stick within yesterday’s range. Housing data, Fedspeak and CPI data from north of the Canadian border will be eyed in NY hours.
• German benchmarks run 4-5bp richer on the day, with the release of the DFA’s ’24 funding plan seemingly meeting wider market expectations, while the latest round of ECB Governing Council pushback re: market pricing of easing helped limit gains. Bunds haven’t challenged yesterday’s extremes/2.00% in yield terms. German ASW spreads are little changed to a touch wider on the day, with the early, contained narrowing more than reversed. BTPs outperform on the EGB rally, with the 10-Year BTP/Bund spread moving to fresh multi-month.
• Gilt yields are 1.5-2.5bp lower across the curve, with the early flattening impulse fading. Futures respected yesterday’s high during the early move higher, while relatively soft pricing metrics at the final DMO gilt auction of ’23 also factored in. Comments from BoE’s Breeden will hit imminently.