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BONDS: EGBs-GILTS CASH CLOSE: Rally Extends To 5th Day, UK Short-End Outperforms

BONDS
BulletMarketsFixed Income Bullets

Core European yields fell for a 5th consecutive session Monday.

  • Gilts and Bunds saw sharp early losses, gapping weaker at the open in tandem with a rebound in global equities.
  • But bonds recovered more than fully as the session went on, with no clear catalyst for the reversal though notably short-end UK yields were the regional outperformer as BoE hike prospects inched higher ahead of UK data the next two days.
  • Implied 2024 BoE cumulative cuts from now stand at 48bp, vs 45bp on Friday; note that MNI's preview of Tuesday's labour market data eyes downside risks to analyst expectations for private regular AWE growth.
  • ECB 2024 cut pricing was unchanged at 63bp; MNI's sources exclusive out today reports that the Governing Council is happy with current market pricing and is likely to retain its meeting-by-meeting approach as part of this week's decision.
  • The German and UK curves both bull steepened, having reversed bear steepening earlier in the session, with periphery EGB spreads little changed.
  • Tuesday's key data point will be UK labour market data. with GDP out Wednesday. Global focus later in the week shifts to US CPI (Weds) and the ECB decision (Thu).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

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Core European yields fell for a 5th consecutive session Monday.

  • Gilts and Bunds saw sharp early losses, gapping weaker at the open in tandem with a rebound in global equities.
  • But bonds recovered more than fully as the session went on, with no clear catalyst for the reversal though notably short-end UK yields were the regional outperformer as BoE hike prospects inched higher ahead of UK data the next two days.
  • Implied 2024 BoE cumulative cuts from now stand at 48bp, vs 45bp on Friday; note that MNI's preview of Tuesday's labour market data eyes downside risks to analyst expectations for private regular AWE growth.
  • ECB 2024 cut pricing was unchanged at 63bp; MNI's sources exclusive out today reports that the Governing Council is happy with current market pricing and is likely to retain its meeting-by-meeting approach as part of this week's decision.
  • The German and UK curves both bull steepened, having reversed bear steepening earlier in the session, with periphery EGB spreads little changed.
  • Tuesday's key data point will be UK labour market data. with GDP out Wednesday. Global focus later in the week shifts to US CPI (Weds) and the ECB decision (Thu).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

Keep reading...Show less