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Coming up in the Asia-Pac Session on Monday:


Coming up in the Asia-Pac Session on Monday:


(H2) Stabilising


Bias Still Points Lower


Fading Onto Recent Gains

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Bear steepening has been the theme of core fixed income markets this morning as European investors continue to digest comments yesterday from Powell that seemed to put a faster pace of tapering pace back on the table. The Eurodollar strip has underperformed the Euribor and short sterling strips this morning.

  • There was a sharp move lower in Bunds around 8:00GMT/3:00ET with no new headline trigger. The moves seem to be attributed largely to continued reaction to Powell yesterday.
  • Gilts have continued their downside moves following a very weak 10-year auction which saw a tail of 1.9bp (last matched in June 2019). Liquidity in gilt markets remains constrained, particularly with the lower supply and continued buying over the next three weeks from the BOE.
  • Looking ahead ISM manufacturing will be the highlight (with ADP employment due before that). US data will be back in focus after Powell's comments yesterday.
  • TY1 futures are down -0-16 today at 130-10 with 10y UST yields up 4.8bp at 1.495% and 2y yields up 3.5bp at 0.603%.
  • Bund futures are down -0.53 today at 171.84 with 10y Bund yields up 3.4bp at -0.317% and Schatz yields up 2.0bp at -0.777%.
  • Gilt futures are down -0.43 today at 125.85 with 10y yields up 6.5bp at 0.872% and 2y yields up 10.3bp at 0.573%.