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Front-End Yields Recover Off Lows, Taking Lead From Treasuries, Bunds

GILTS
  • Gilt futures moving in tandem with Bunds, Treasuries in recent trade, although the post-US PMI sell-off has abated to keep prices off any test of the day's low at 105.46.
  • Focus remains on the front-end of the curve given the sensitivity to CB pricing, which continues to recover a sizeable portion of the early Friday move lower: 2y yields have trimmed the day's downside by over 15bps, but are yet to close the opening gap (yield at 3.272%).
  • Move in front-end yields mimicking the price action in currency markets, with GBP/USD off the earlier 1.2191 lows but remaining in negative territory on the day. First intraday upside target at 1.2288 - which would mark a reversal of the equity-inspired losses.

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