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BONDS: Recovery Rally Fades

BONDS
BulletMarketsFixed Income Bullets

The risk-off bond rally surrounding the escalation of the Israeli attacks on Hezbollah has faded, with equities stabilising ahead of the NY cash open.

  • A slightly firmer-than-expected (but still negative) Philly Fed non-manufacturing survey had little impact, with details more mixed (see our data reaction bullet for greater colour).
  • Meanwhile, EUR IG deals have started to price and the $IG slate is building, although we don’t think the size of the deals is enough to meaningfully impact core global bond prices at this stage.
  • It may just be a case of the rally giving better entries for potential shorts as NY reacts to the Chinese monetary stimulus announced overnight.
  • TY and gilt futures hit fresh session lows in the last 30 minutes or so, before stabilising.
  • EGBs continue to outperform as a swifter pace of ECB easing is priced into the short end. Schatz yields still 1-2bp lower on the day as a result.
  • Core curves steeper.
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The risk-off bond rally surrounding the escalation of the Israeli attacks on Hezbollah has faded, with equities stabilising ahead of the NY cash open.

  • A slightly firmer-than-expected (but still negative) Philly Fed non-manufacturing survey had little impact, with details more mixed (see our data reaction bullet for greater colour).
  • Meanwhile, EUR IG deals have started to price and the $IG slate is building, although we don’t think the size of the deals is enough to meaningfully impact core global bond prices at this stage.
  • It may just be a case of the rally giving better entries for potential shorts as NY reacts to the Chinese monetary stimulus announced overnight.
  • TY and gilt futures hit fresh session lows in the last 30 minutes or so, before stabilising.
  • EGBs continue to outperform as a swifter pace of ECB easing is priced into the short end. Schatz yields still 1-2bp lower on the day as a result.
  • Core curves steeper.