September 17, 2024 18:15 GMT
BONDS: EGBs-GILTS CASH CLOSE: Intraday Reversal Sees Modest Bear Flattening
BONDS
European curves flattened Tuesday, with relatively pronounced weakness at the short end of curves.
- Futures peaked in early trade, as Federal Reserve 50bp cut pricing ticked higher
- But Bunds and Gilts pulled back sharply after 1300UK as oil and equities picked up, while US retail sales data came in slightly stronger than expected on balance, helping keep pressure on the space.
- The main European data release was German ZEW which surprised to the downside, but it was not a market mover.
- Bunds underperformed Gilts, with both curves flattening on the day on a short-end yield backup as implied 2024 BoE and ECB cuts ticked up 2-3bp from intraday lows.
- Periphery EGB spreads closed basically unchanged, reversing early tightening.
- While the Fed decision after the European cash close takes top billing Wednesday, the early highlight is UK CPI which the BoE will have in hand ahead of its decision release Thursday. An uptick in services prices is expected, though the BoE will likely look through any surprises - MNI's preview is here (PDF).
Closing Yields / 10-Yr Periphery EGB Spreads To Germany
- Germany: The 2-Yr yield is up 4.4bps at 2.227%, 5-Yr is up 3.8bps at 2.033%, 10-Yr is up 2.1bps at 2.143%, and 30-Yr is down 0.2bps at 2.398%.
- UK: The 2-Yr yield is up 3.6bps at 3.824%, 5-Yr is up 2.4bps at 3.638%, 10-Yr is up 0.9bps at 3.768%, and 30-Yr is up 0.3bps at 4.353%.
- Italian BTP spread down 0.1bps at 135.5bps / Spanish up 0.2bps at 79.7bps
Keep reading...Show less
241 words