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Curves Lean Flatter, With Jobless Claims And Jackson Hole Ahead

BONDS

Global core FI curves tilt flatter in early European trade Thursday, with Gilts outperforming. Treasury yields are fairly flat across the curve (+/-1bp), with very slight twist flattening on short-end underperformance; the UK and German curves have bull flattened.

  • Despite a relatively bullish tone in equities, driven by Nvidia's strong results after the close, safe havens remain bid as the impact of Wednesday's downside PMI surprises linger. That said, futures have retraced best levels.
  • Periphery EGB spreads are slightly wider, with BTPs modestly weighed down by a BBG report that Italy's gov't is eyeing a borrower-friendly measure on bad loans.
  • Philly Fed's Harker and Boston Fed's Collins make TV appearances today as we await the release of the full Jackson Hole schedule (our preview was out yesterday) - Powell's speech Friday remains the focus.
  • Soft French confidence surveys out this morning had little impact. Data yet to come in the session includes UK CBI Distributive Trades, with US jobless claims, durable goods, and KC Fed manufacturing.
  • The highlight of the supply calendar is $8B US 30Y TIPS reopening.

Latest levels:

  • Sep US 10Y futures (TY) down 0.5/32 at 109-28.5 (L: 109-24 / H: 109-31.5)
  • Sep Bund futures (RX) up 35 ticks at 132.91 (L: 132.69 / H: 133.36)
  • Sep Gilt futures (G) up 72 ticks at 94.74 (L: 94.51 / H: 94.95)
  • Italy / German 10-Yr spread 0.2bps wider at 165.4bps

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