Off Early Cheaps, Fed Eyed

Some relative resilience in U.S. Tsys limits any cheapening in European FI markets. Softer than expected Eurozone money supply will may have also fed in, as the trend slowing of bank lending growth was maintained.

• The major German cash benchmarks show 2-3bp cheaper across the curve as a result, while Bund futures are -5 or so, around 15 ticks off worst levels of the day. Participants await Germany the launch of EUR4bn of the new 7-year 2.40% Nov-30 Bund (ISIN: DE000BU27006).
• Core/semi-core EGB curves see similar moves to the German equivalent, while peripherals are little changed to a touch tighter vs. 10-Year Bunds.
• Gilts are 1.0-2.5bp cheaper across the curve, with futures little changed after the opening downtick in futures was reversed.
• A recent round of sales across the Tsy futures curve has kept any outperformance in U.S. Tsys in check, as the major cash benchmarks run 2.5bp richer to 0.5bp steeper, with some twist steepening in play. Focus remains squarely on the impending FOMC decision, where a 25bp hike is expected, meaning that focus will quickly move the post-meeting statement/press conference (see our full preview of the event here).