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BONDS: Asia/London Weakness Fades

BONDS
BulletMarketsFixed Income Bullets

Light demand for wider core global FI markets as NY participants settle in and any weakness surrounding Trump’s tariff threats against China, Canada & Mexico fades.

  • Tsy yields back to unchanged on the day, with Asia/London sell offs proving shallow.
  • Some cushion perhaps provided by hope that Tsy Sec nominee Bessent will provide a calming influence amongst the Trump cabinet (after the nomination drove the Tsy rally on Monday).
  • Bunds the outperformer amongst core global FI markets (2bp tighter vs. Tsys), as continued growth worry and the threat of more forceful ECB easing continue to dominate in Europe, although ECB speak generally remains non-committal to the size of future cuts.
  • EGB spreads little changed to 1bp tighter on the day, BTPs outperform. A recovery from session lows in European equities helps limit any widening.
  • OATs back towards 80bp after pushing above 82bp earlier in the weak. Several sell-side names have issued cautious notes on OATs, both RV and outright.
  • Gilts the laggard. Gilt/Bunds +2.5bp, threatening a clean break above cycle highs. That would expose the mini-Budget ’22 closing highs (see recent bullet for greater detail on the move/technical levels).
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Light demand for wider core global FI markets as NY participants settle in and any weakness surrounding Trump’s tariff threats against China, Canada & Mexico fades.

  • Tsy yields back to unchanged on the day, with Asia/London sell offs proving shallow.
  • Some cushion perhaps provided by hope that Tsy Sec nominee Bessent will provide a calming influence amongst the Trump cabinet (after the nomination drove the Tsy rally on Monday).
  • Bunds the outperformer amongst core global FI markets (2bp tighter vs. Tsys), as continued growth worry and the threat of more forceful ECB easing continue to dominate in Europe, although ECB speak generally remains non-committal to the size of future cuts.
  • EGB spreads little changed to 1bp tighter on the day, BTPs outperform. A recovery from session lows in European equities helps limit any widening.
  • OATs back towards 80bp after pushing above 82bp earlier in the weak. Several sell-side names have issued cautious notes on OATs, both RV and outright.
  • Gilts the laggard. Gilt/Bunds +2.5bp, threatening a clean break above cycle highs. That would expose the mini-Budget ’22 closing highs (see recent bullet for greater detail on the move/technical levels).