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BONDS: Dovish Fed Repricing & Pullback In Equities Lend Support

BONDS
BulletMarketsFixed Income Bullets

The last couple of hours has seen core global FI markets firm, with a pullback from session highs in global equity index futures and continued dovish Fed repricing driving things.

  • Fed Funds futures price ~41bp of cuts for Wednesday’s FOMC, while dated OIS show ~39bp i.e. both are pricing > 50% odds of a 50bp cut for the event.
  • Little reaction to firmer-than-expect NY Fed Empire M’fing data.
  • Front end of the Tsy curve outperforms as a result, with yields there running 2.5-5.5bp lower on the day.
  • TY futures to fresh session highs at 115-19+, next resistance at last week’s high (115-23+).
  • Bund futures register fresh session highs at typing.
  • Gilts still comfortably within Thursday’s range, just below session bests.
  • Bund curve sees some light flattening with yields 2-3bp lower, while git yields are ~1.5bp lower across the curve.
  • BTPs still the outperformer in Europe, ~1bp tighter vs. Bunds on the day, while the remainder of the major EGBs spreads and gilts widen at the margin vs. German 10s.
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The last couple of hours has seen core global FI markets firm, with a pullback from session highs in global equity index futures and continued dovish Fed repricing driving things.

  • Fed Funds futures price ~41bp of cuts for Wednesday’s FOMC, while dated OIS show ~39bp i.e. both are pricing > 50% odds of a 50bp cut for the event.
  • Little reaction to firmer-than-expect NY Fed Empire M’fing data.
  • Front end of the Tsy curve outperforms as a result, with yields there running 2.5-5.5bp lower on the day.
  • TY futures to fresh session highs at 115-19+, next resistance at last week’s high (115-23+).
  • Bund futures register fresh session highs at typing.
  • Gilts still comfortably within Thursday’s range, just below session bests.
  • Bund curve sees some light flattening with yields 2-3bp lower, while git yields are ~1.5bp lower across the curve.
  • BTPs still the outperformer in Europe, ~1bp tighter vs. Bunds on the day, while the remainder of the major EGBs spreads and gilts widen at the margin vs. German 10s.