Early Pressure Reversed, Generally A Little Firmer On The Day

Late NY/Asia Tsy & JGB weakness helped bias Bund futures lower before the old Eurex open. UK data and a modest downtick for European equities seems to have helped stabilise wider core global FI markets since, with some light richening now seen on core bond curves. Tsy and Bund futures had a limited look below Thursday lows in Asia, before bouncing.

• Cash Tsy yields run 2-3bp lower across the curve, with TYH4 just off the top of a 0-10+ range. PCE data presents the major risk event ahead of the elongated Christmas weekend, while durable goods, new home sales and final UoM sentiment data will also be eyed during NY hours. Fed Funds futures show ~158bp of cuts through ’24, with ~23.5bp of easing priced through the end of the Mar ’24 FOMC.
• German yields are little changed to 1.5bp lower on the day, with a light bull steepening move seen on the curve. Bund futures have reversed overnight losses and now sit a handful of ticks above unchanged levels. EGB spreads vs. Bunds are little changed on the day generally sitting within -/+1bp of yesterday’s closing levels.
• Mixed UK economic data presented two-way trade at the London open, but it seems that the negative revisions in the final Q3 GDP prints had more meaningful market feedthrough than the firmer-than-expected retail sales data. Cash yields are 1-3bp lower on the day, with some bull steepening seen. Futures are +25, sticking within yesterday’s range thus far. BoE-dated OIS hovers just off recent dovish extremes, showing ~145bp of cuts for ’24.
• We have flagged closing times/Christmas holiday operating hours for various exchanges elsewhere.