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Bonds Continue to Pare Gains

US TSYS

Combination of headline factors has 30Y bonds back near overnight lows (USU at 136-19, +1), yield curves flatter but stable amid selling across the board on ECB'S KNOT comments/headlines since top of the hour contributing to Tsys paring gains:

  • SAYS NOT CONVINCED THAT GOING BACK TO NEUTRAL ENOUGH .. MARKET PRICING OF RATE HIKE IN SEPT NOT UNWISe .. LEANING TOWARDS 75 BPS BUT OPEN TO DISCUSSION, Bbg.
  • Meanwhile, UK Gilt yields climbing to mid-2014 levels, 10Y 2.75%, 30Y 3.03% as Goldman Sachs analysts warn "UK inflation could top 22% next year if natural gas prices remain elevated in the coming months", Bbg.

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