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Heavy European issuance weighed this morning but focus switching to US CPI

BONDS

Core fixed income has been under pressure this morning, particularly in Europe which sees some heavy supply this morning.

  • The EU has held a syndication for a E9bln 7-year NGEU issue, the Netherlands sold almost E2bln of its 30-year DSL via auction, Italy sold E5.75bln of 3/7/30-yera BTPs while Germany looks to sell E5bln Schatz. In addition, the UK has sold GBP3bln of 5-year gilts.
  • Economic data so far today has been focused on the UK with labour market data showing the number of payrolled employees overtook the pre-pandemic peak in August.
  • The focus is now squarely on the US CPI print, with both headline and core inflation expected to fall a tenth from last month's levels in Y/Y terms.
  • TY1 futures are down -0-4+ today at 133-05 with 10y UST yields up 1.2bp at 1.340% and 2y yields up 0.2bp at 0.216%.
  • Bund futures are down -0.28 today at 171.52 with 10y Bund yields up 1.6bp at -0.316% and Schatz yields up 0.4bp at -0.718%.
  • Gilt futures are down -0.33 today at 127.65 with 10y yields up 3.2bp at 0.776% and 2y yields up 2.1bp at 0.246%.

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