Generally A Touch Shy Of Best Levels

Core global FI markets remained underpinned. This morning’s German fiscal news, coupled with weakness in crude oil futures (which have moved off worst levels) feeding into the likes of EUR 5y5y inflation-linked swaps, has generally supported the space thus far.

• Another round of block flow in UXY futures (after block sales in TY & UXY futures during Asia/early London hours) helps cap the space in recent trade, with Bund and gilt futures bulls failing to probe the round numbers of 131.00 and 96.00, respectively.
• The aforementioned tick away from session lows in crude oil futures is also noted over the last 2 hours.
• Still, Tsys trade around unchanged levels in the cash space (flat to 1bp lower in yield terms), underperforming core peers on the day, while the broader USD remains on the defensive in the FX sphere.
• German paper generally outperforms both Tsys and gilts on the back of the previously noted fiscal headlines (covered in more detail elsewhere), with ASWs a little wider on the session given questions re: German ’24 supply matters. German cash yields are 4-6bp lower on the day, with the belly leading the bid.
• Peripherals are mixed vs. Bunds, with 10-Year GGBs ~2bp wider and 10-Year BTPs ~2.5bp narrower.
• Cash gilt yields are 3.0-4.5bp lower across the curve, with the short end and belly leading. A quick reminder that comments from BOE Governor Bailey were viewed as dovish when it comes to market pricing, although generally represented a reiteration of previously covered ideas.