Curves Flatter With Drivers At Both Ends

Global cash curves are flatter in early Wednesday trade, with dovish short-term rate expectations being reconsidered, and the BoJ keeping a lid on long-end yields.

• While the BoJ's decision to maintain the status quo on monetary policy - including maintaining the current yield curve control regime - was widely anticipated by analysts, the lack of a hawkish surprise saw a strong rally across global core FI.
• 10Y JGB yields fell as much as 14bp and Tsys 9bp.
  
• In Europe, stronger-than-expected UK CPI data and pushback by the ECB's Villeroy on yesterday's dovish Bloomberg sources piece saw near-term BoE and ECB hike pricing firming.
• The Tsy curve has bull flattened, with Germany's twist flattening and the UK's modestly bear flattening. EGB periphery spreads are mixed.
• Attention turns to US data (PPI, retail sales, industrial production) and Fed communications (Beige Book, Atlanta's Bostic, Dallas' Logan, St Louis' Bullard, Philly's Harker). We also get a $12B 20Y Tsy auction.

Latest levels:

• Mar 10-Yr US Tsy futures (TY) up 9.5/32 at 114-31 (L: 114-16 / H: 115-04)
• Mar Bund futures (RX) up 2 ticks at 139.28 (L: 138.97 / H: 139.99)
• Mar Gilt futures (G) down 23 ticks at 104.22 (L: 103.97 / H: 104.97)
• Italy / German 10-Yr spread 0.4bps wider at 180.5bps