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BONDS: Off Lows

BONDS
BulletMarketsFixed Income Bullets

Bonds recover from session lows as NY participants filter in.

  • Initial support levels in the major core global FI futures held/went untested, with NY perhaps paying greater attention to heightened geopolitical risk as bonds rally and equity futures weaken.
  • The move lower in bonds seemed quite large to be completely justified by a relatively in line with expected round of German national CPI data.
  • While long positioning in the EUR short end was no doubt a factor in the move, some desks started to flag quarter-end flow as another factor weighing on core global FI markets.
  • GBP swap spreads are wider, meaning UK pay-side flow ahead of quarter end is seemingly factoring in.
  • A similar story has been seen in the front end of the U.S. swap curve (2s and 5s) during pre-NY trade.
  • Elsewhere, a reminder that J.P.Morgan estimated ~$125bn of global pension fund quarter-end rotation needs (out of bonds and into equities) back on September 13, another potential input for the London morning sell off.
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Bonds recover from session lows as NY participants filter in.

  • Initial support levels in the major core global FI futures held/went untested, with NY perhaps paying greater attention to heightened geopolitical risk as bonds rally and equity futures weaken.
  • The move lower in bonds seemed quite large to be completely justified by a relatively in line with expected round of German national CPI data.
  • While long positioning in the EUR short end was no doubt a factor in the move, some desks started to flag quarter-end flow as another factor weighing on core global FI markets.
  • GBP swap spreads are wider, meaning UK pay-side flow ahead of quarter end is seemingly factoring in.
  • A similar story has been seen in the front end of the U.S. swap curve (2s and 5s) during pre-NY trade.
  • Elsewhere, a reminder that J.P.Morgan estimated ~$125bn of global pension fund quarter-end rotation needs (out of bonds and into equities) back on September 13, another potential input for the London morning sell off.