February 21, 2023 10:24 GMT
Europe Dragging Tsys Lower On PMI Beats
European bonds are lower in early Tuesday trade following stronger-than-expected February flash PMI data.
- Each of the French, German, and Eurozone composite PMIs beat expectations (though services did the heavy lifting, with manufacturing disappointing), followed by a much stronger-than-expected UK print.
- The German and UK curves bear flattened, with ECB and BoE terminal rate expectations rising. Gilts are underperforming, with short-end/belly yields higher by more than 10bp.
- The European core FI move dragged Treasuries lower, with U.S. PMIs and existing home sales the highlights of the data slate.
- ECB's Lagarde is the session's major central bank speaker of note.
- In supply, we get a $42bln 2Y Note auction in the U.S., with Germany selling E5bln of Bobl and Spain selling new 15Y Obli via syndication.
- Mar 10-Yr futures (TY) down 12.5/32 at 111-19.5 (L: 111-19 / H: 112-00.5)
- Mar Bund futures (RX) down 31 ticks at 134.55 (L: 134.32 / H: 134.97)
- Mar Gilt futures (G) down 53 ticks at 102.51 (L: 102.44 / H: 103.23)
- Italy / German 10-Yr spread 2.7bps wider at 189.6bps
Keep reading...Show less