Long Ends Underpinned Post-Eurozone PMI

Little to really add when it comes to bond commentary over the last couple of hours, softer-than-expected European PMIs presented the dominant factor in the London morning, underpinning broader bonds. Note that the composite UK PMI print provided some divergence across the Channel, driven by firmer-than-expected services PMI data.

• The former has reintroduced receiver-side flows into ECB-dated OIS (~155bp of ’24 cuts priced once again), with the German curve bull flattening. 10-Year Bunds outperform most regional peers at the margin, with Greece providing the major exception.
• The front end of the gilt curve is a little cheaper on the day given the UK data impulse (focus on commentary re: a strong wage component in the PMI release), with the broader curve twist flattening. BoE-dated OIS isn’t meaningfully different from levels seen early today, with a little over 110bp of cuts priced through’24.
• Tsy yields are little changed to 1bp lower on the day.
• Mixed China economic activity data (firmer-than expected industrial production and softer-than-expected retail sales) did little overnight, with trend improvements eyed.
• Looking ahead, scheduled risk events include the flash U.S. PMIs, initial post FOMC Fedspeak from NY President Williams, continued ECB musings and comments from BoC Governor Macklem.