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BONDS: Shallow Rally Fades

BONDS
BulletMarketsFixed Income Bullets

Early bid in bonds reversed, with yields now little changed to higher on the day.

  • Bund bulls failed to breach yesterday’s highs during the early rally. Futures -24 at 134.71 last vs. highs of 134.98.
  • German yields are little changed to 1.5bp higher across the curve, front end leads the weakness after outperforming in recent sessions amid dovish ECB repricing.
  • EGB spreads to Bunds little changed to 1.5bp tighter.
  • BTP/Bunds continues to trade between 130-135bp. BTP supply passed smoothly. Some signs of cash demand for BTPs this morning.
  • OAT/Bunds moves back to ~75bp after threatening to break above 80bp earlier in the week. French Finance Minister Arnaud’s study of potential tax hikes has seemingly helped the move.
  • What’s more, there may have been some interest to fade the widening around the round number which protects the ’24 wides in the spread
  • Gilt futures didn’t quite manage to close yesterday’s opening gap lower during the early rally, before pulling back alongside peers.
  • UK yields little changed to 1.5bp higher, also flattening.
  • Weak demand at the latest 7-Year gilt auction factored into recent trade. We had flagged some potential headwinds for demand despite the apparent RV opportunities ahead of the sale.
  • ’30 German supply due imminently.
  • Little in the way of major event risk scheduled for the remainder of the day, mid-level U.S. data and comments from Fed’s Kugler due.
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Early bid in bonds reversed, with yields now little changed to higher on the day.

  • Bund bulls failed to breach yesterday’s highs during the early rally. Futures -24 at 134.71 last vs. highs of 134.98.
  • German yields are little changed to 1.5bp higher across the curve, front end leads the weakness after outperforming in recent sessions amid dovish ECB repricing.
  • EGB spreads to Bunds little changed to 1.5bp tighter.
  • BTP/Bunds continues to trade between 130-135bp. BTP supply passed smoothly. Some signs of cash demand for BTPs this morning.
  • OAT/Bunds moves back to ~75bp after threatening to break above 80bp earlier in the week. French Finance Minister Arnaud’s study of potential tax hikes has seemingly helped the move.
  • What’s more, there may have been some interest to fade the widening around the round number which protects the ’24 wides in the spread
  • Gilt futures didn’t quite manage to close yesterday’s opening gap lower during the early rally, before pulling back alongside peers.
  • UK yields little changed to 1.5bp higher, also flattening.
  • Weak demand at the latest 7-Year gilt auction factored into recent trade. We had flagged some potential headwinds for demand despite the apparent RV opportunities ahead of the sale.
  • ’30 German supply due imminently.
  • Little in the way of major event risk scheduled for the remainder of the day, mid-level U.S. data and comments from Fed’s Kugler due.