European Mkts Discount Policy Hawks Too

Tsys finish steady (10s) to mildly higher - well off early session highs as markets surged in the aftermath of the BOE and ECB both hiking rates 50bp following Wed's 25bp hike from the FOMC.

• Focus turns to Fri's employment read for January (+190k est vs. +223k prior), Fed out of Blackout w/ SF Fed Daly first "scheduled" speaker on Fox Business at 1430ET.
• Similar to Wed's post-FOMC reaction, European yields marching lower in anticipation of the BoE/ECBs policy pivot sooner than later. (Bund 10Y yld -23.5bp post ECB, for second largest decline on record, while Italian BTP 10Y yield saw largest decline in nearly 3 years to 3.9).
• Additional impetus, ECB Pres Lagarde said “the economy has proved more resilient than expected and should recover over the coming quarters,” as higher wages, falling energy costs and government support programs will boost real incomes from depressed levels.
• Policy annc's clouded any market react to US data: Initial jobless claims came in lower than expected once again, down from an unrevised 186k to 183k (cons 195k) in the week to Jan 28; Stronger than expected labor productivity in Q4 (and Q3 after an upward revision) pushes unit labor costs to the softest quarterly growth rate since 1Q21.
• Large 5s30s flattener block (-18,300 FVH3 110-02.5, sell-through 110-03.25 post-time bid vs. +6,000 USH3 132-04, buy through 132-03 offer added to long end support; over 15,000 FHH sale blocks follow (110-02 to 109-20.