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Extending lower with Treasuries on the cash open.

  • Bund sees a contained reaction from the UK data miss, Payrolled Employees Monthly change was lower than expected and also revised lower.Average Weekly Earnings 3M/YoY also fell.
  • Bund initially gained just 11 ticks on the release, but is back to extending lower post Cash open..
  • Investors will now await the UK CPI tomorrow, with this part of the data brushed aside this morning, although the the Pound is offered and the Sonia strip is bid, will make for an interesting Gilt open.
  • Bund and Treasuries have continued to consolidate the FTQ flow seen on Friday, Yesterday and overnight, with Bund clearing the gap support noted Yesterday at 128.82.
  • Some might now look at 128.61 for support, but better is seen at 128.41.
  • Main gap target for TYZ3 is at 106.24.
  • We have heavy supply in Europe today, which will help keep the lid in early trade.
  • Today sees, German ZEW, US Retail Sales/IP, Canada CPI.
  • SUPPLY: HEAVY SUPPLY: Netherlands EU5bn 2044 (would equate to 29k Buxl), UK £2.75bn 2053 (equates to 36.2k Gilt) should weigh. German 2yr Schatz (equates to 43.3k Schatz) will weigh. Finland 2028, 2033 should have no impact.
  • SPEAKERS: ECB Knot, Centeno, Guindos, Holzmann, Nagel, BoE Dhingra, Fed Barkin, Kashkari.

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