DM Bonds Rally

No obvious trigger for the recent rally in core global FI markets. TY futures trade through the highs seen over the last few sessions, while Bunds also firm. The previously flagged SOFR buying came at the same time.

• The move may be a London/European reaction to the previously covered BBG source report that suggested that “China is considering a proposal to have local governments across the country buy millions of unsold homes, people familiar with the matter said, in what would be one of its most ambitious attempts yet to salvage the beleaguered property market.”
• We are unsure if that is the case, but the move may very well reflect a DM reaction to perceptions surrounding increased Chinese stimulus efforts.
• The Chinese curve has twist steepened on the day, but the move in yields was modest (-1.0bp to +0.5bp).