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Lower As Global Matters & Issuance Weigh

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Late Tuesday weakness in Tsys and Australian CPI data provided some pre-London weakness. Focus on EGB & gilt supply then added further pressure.

  • Slightly firmer-than-expected German IFO data also factored in, although all three major metrics remain comfortably below 100.
  • Bund futures haven’t tested Monday’s low, last ~40 ticks lower. German cash yields are 3-4bp higher today. 10s are under the most pressure ahead of the impending Bund auction results.
  • Peripheral EGBs are a little wider vs. Bunds. Click for more on that.
  • Gilt futures are through initial support (99.45), leaving bearish focus on the cycle low (96.01). Contract last -40.
  • Cash gilt yields are 4-6bp higher on the day, bear flattening.
  • Modest hawkish adjustments have been seen in STIR pricing covering both the BoE & ECB, although familiar ranges remain intact.
  • ECB-dated OIS shows ~75bp of cuts through ’24, while BoE contracts show ~50bp of cuts over the same horizon.
  • Comments from ECB’s Nagel (hawk) didn’t really move the needle. He will seemingly support the consensus view of a June cut if the data allows, but was not willing to commit to a pre-prescribed cutting cycle beyond there and is sceptical re: the inflation trajectory.
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Late Tuesday weakness in Tsys and Australian CPI data provided some pre-London weakness. Focus on EGB & gilt supply then added further pressure.

  • Slightly firmer-than-expected German IFO data also factored in, although all three major metrics remain comfortably below 100.
  • Bund futures haven’t tested Monday’s low, last ~40 ticks lower. German cash yields are 3-4bp higher today. 10s are under the most pressure ahead of the impending Bund auction results.
  • Peripheral EGBs are a little wider vs. Bunds. Click for more on that.
  • Gilt futures are through initial support (99.45), leaving bearish focus on the cycle low (96.01). Contract last -40.
  • Cash gilt yields are 4-6bp higher on the day, bear flattening.
  • Modest hawkish adjustments have been seen in STIR pricing covering both the BoE & ECB, although familiar ranges remain intact.
  • ECB-dated OIS shows ~75bp of cuts through ’24, while BoE contracts show ~50bp of cuts over the same horizon.
  • Comments from ECB’s Nagel (hawk) didn’t really move the needle. He will seemingly support the consensus view of a June cut if the data allows, but was not willing to commit to a pre-prescribed cutting cycle beyond there and is sceptical re: the inflation trajectory.