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Divergence across the 10-year space

BONDS
  • There have been some divergent moves across FI this morning. The short-end of the curve has generally richened across the board with 2-year UST and Schatz yields both around 5bp lower on the day at the time of writing. However, at the 10-year segment of the curve UST yields are pretty much flat on the day, gilt yields a couple of basis points higher and Bund yields 3bp lower.
  • There's no real fundamental driver for the change in the 10-year gilt-Bund spread, although the moves could partly be in anticipation of tomorrow's MPC decision (markets continue to price around a 30% probability of a 50bp hike tomorrow).
  • Elsewhere today the main data event will be the release of the ADP employment report (ahead of Friday's payrolls report).
  • TY1 futures are up 0-10+ today at 111-06+ with 10y UST yields down -0.6bp at 4.020% and 2y yields down -4.7bp at 4.857%.
  • Bund futures are up 0.41 today at 132.63 with 10y Bund yields down -4.2bp at 2.512% and Schatz yields down -6.2bp at 2.986%.
  • Gilt futures are down -0.27 today at 948.85 with 10y yields up 1.3bp at 4.408% and 2y yields down -2.8bp at 5.002%.

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