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Continuing sell-off after Powell's comments yesterday

BOND SUMMARY

After Powell's hawkish comments yesterday the fixed income sell-off continues as markets continue to price both more and quicker hikes for the Fed (and as a spillover to other markets like the UK, even where it seems much less likely we will see 50bp hikes given recent policymaker comments).

  • USTs underperform across the curve with a slight bear flattening. Gilts also bear flattening with SONIA futures underperforming both Euribor and Eurodollar futures this morning. The German curve has bear steepened by 0.3bp.
  • 10-year yields for Treasuries, Bunds and gilts are now all at cycle highs.
  • Looking ahead to today, the data calendar is releatively light but there are a number of central bank speakers including ECB's Villeroy, Panetta, Lagarde and Lane, Fed's Wuerffel, William, Daly and Mester. There are a number of other senior central bankers due to speak at the BIS Innovation Summit (whichmay not have any near-term monpol implications).
  • TY1 futures are down -0-11+ today at 122-26+ with 10y UST yields up 5.6bp at 2.348% and 2y yields up 6.7bp at 2.185%.
  • Bund futures are down -0.94 today at 159.36 with 10y Bund yields up 4.0bp at 0.507% and Schatz yields up 4.0bp at -0.253%.
  • Gilt futures are down -0.69 today at 120.66 with 10y yields up 3.9bp at 1.676% and 2y yields up 5.8bp at 1.371%.

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