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BONDS: Off Overnight Lows But Still Below Yesterday’s Settlement

BONDS

Bund futures are off overnight lows but remain -15 ticks off yesterday’s settlement levels at 132.19, following yesterday evening’s US Treasury-led selloff.

  • Last night’s Tsy weakness came despite a renewed pullback in US equities, with a weak 5-year auction adding pressure. 
  • Participants may have elected to take risk off the table ahead of next week’s Fed and BoJ decisions.
  • The overnight recovery was aided by a surprise 20bps MLF cut from the PBoC, following on from the other reductions in policies reductions earlier in the week.
  • Today, Italy will conclude issuance for the week by holding a BTP Short Term and BTPei auction. On offer will be E3.0-3.5bln of the new 3.10% Aug-26 BTP Short Term, E0.75-1.25bln of the 1.50% May-29 BTPei and E0.75-1.00bln of the 2.55% Sep-41 BTPei.
  • Today’s regional calendar includes sentiment data from France and Germany, while the US Q2 prelim GDP print and jobless claims headline in North America.
  • There are also scheduled appearances from ECB’s Nagel (1200BST) and Lagarde (1600BST). 
     

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