Core Curves Bear Steepen, 10-Year Futures Break Yesterday’s Lows

Yesterday’s pullback from multi-month/year-to-date bests extends, with little in the way of meaningful macro headline flow evident.

• TY, Bund and gilt futures have all breached yesterday’s lows, but remain some distance above more meaningful support levels, leaving bull trends intact. Core global FI markets sit a little off cheapest levels of the day.
• We haven’t seen much in the way of fundamental headline catalysts to promote the cheapening.
• Thin liquidity, given the time of year, provides little willing counter to momentum-based moves.
• Some have also pointed to profit taking activity into year-end given the scope of the recent rally.
• Some weakness in the super-long end of the JGB curve was witnessed for a second straight day (on the BoJ’s Q124 Rinban plan tweaks), but the moves in broader core global FI markets didn’t really kick in until after gilts opened.
• Cash Tsy yields are 2-5bp firmer on the day, as the curve bear steepens (cash Tsys will close at 14:00 NY/19:00 London).
• German yields are 2.0-8.5bp firmer on the session, bear steepening.
• EGBs are generally little changed to tighter vs. Bunds. Dutch paper sees some very modest widening.
• Spanish CPI was generally a touch softer-than-expected, while worry re: continued fiscal support from Italy surrounding house renovations has failed to promote BTP widening.
• Gilt yields are flat to 8bp firmer on the day, also bear steepening. A reminder that major UK rates markets close at 12:15 (London).
• Portuguese CPI and the U.S. MNI Chicago PMI print provide the focal points from here, with eyes also on any month-end related flows.