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BONDS: EGBs-GILTS CASH CLOSE: Weakest Day Of September Pre-Fed And BoE

BONDS
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Gilt and Bund yields rose Wednesday by the most in September so far, ahead of key central bank decisions in the next 24 hours.

  • The theme of the day was an apparent paring of long bond positioning heading into the Federal Reserve decision which as of the European cash close was basically implied as a coin flip between a 25bp or 50bp cut, reversing a more pronounced tilt toward the latter.
  • Earlier in the session, UK CPI data was basically in line with expectations. The morning saw a bear-flattening in Gilts as UK short-term rates moved slightly more hawkish as long positioning was pared in sympathy with US developments.
  • The UK curve leaned bear flatter, with Germany's bear steepening. EGB periphery spreads widened steadily through the session, exacerbated by a risk-off move in equities.
  • Thursday's BoE decision is expected to see rates left on hold, but there will be focus on the vote split, any change in guidance and the QT decision - MNI's preview is here (PDF). Additionally, the Norges Bank (also expected to hold) decision will also garner some attention - MNI's preview is here (PDF).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

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Gilt and Bund yields rose Wednesday by the most in September so far, ahead of key central bank decisions in the next 24 hours.

  • The theme of the day was an apparent paring of long bond positioning heading into the Federal Reserve decision which as of the European cash close was basically implied as a coin flip between a 25bp or 50bp cut, reversing a more pronounced tilt toward the latter.
  • Earlier in the session, UK CPI data was basically in line with expectations. The morning saw a bear-flattening in Gilts as UK short-term rates moved slightly more hawkish as long positioning was pared in sympathy with US developments.
  • The UK curve leaned bear flatter, with Germany's bear steepening. EGB periphery spreads widened steadily through the session, exacerbated by a risk-off move in equities.
  • Thursday's BoE decision is expected to see rates left on hold, but there will be focus on the vote split, any change in guidance and the QT decision - MNI's preview is here (PDF). Additionally, the Norges Bank (also expected to hold) decision will also garner some attention - MNI's preview is here (PDF).

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

Keep reading...Show less