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Moving higher as risk-off themes continue


Core fixed income has moved higher again in response to risk-off themes - a combination of Chinese concerns surrounding Covid-19 , a disappointing ZEW survey and continued USD appreciation (with the focus in FX-land very much on EURUSD being very close to breaking parity). Again we have seen UST and gilt curves flatten but the German curve steepen.

  • Today there is not much on the calendar in terms of data, but there are a couple of important speeches due later, particularly from the Fed's Barkin and BOE's Bailey (see a preview of the latter's speech here).
  • UK politics will continue to make headlines today, with the deadline to enter the race to be next Tory leader (and PM) due to close today at 18:00BST. Sunak (current favourite in betting markets) is also due to set out more of his policies today.
  • The market also already has one eye on tomorrow's US CPI data.
  • TY1 futures are up 0-20+ today at 119-00+ with 10y UST yields down -7.2bp at 2.923% and 2y yields down -8.0bp at 2.995%.
  • Bund futures are up 1.67 today at 153.07 with 10y Bund yields down -12.8bp at 1.114% and Schatz yields down -9.7bp at 0.329%.
  • Gilt futures are up 1.08 today at 116.14 with 10y yields down -12.0bp at 2.056% and 2y yields down -14.5bp at 1.717%.

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