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The core (U.S., Germany & the UK) 2s10s and 5s30s curves sit at multi-week highs, although the core 2s10s curves (remain deeply inverted.
- Here we recap some of the driving factors behind that price action (already flagged elsewhere today):
- The recent run of "Goldilocks" data out of the U.S. (bolstered by today’s releases)
- Negative carry of flattener plays in an inverted curve scenario
- BoJ YCC tweak
- An element of apparent relatively long cash Tsy positioning
- Tsy supply-related worries (accompanied by Fitch’s one-notch sovereign downgrade of the U.S.).
- The easing of BoE pricing around today’s monetary policy decision, coupled with some capitulation of existing leaning into curve flatteners, is probably feeding through to wider markets here as well.
Fig. 1: U.S., German & UK 2s10s Yield Curves (bp)
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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