BONDS: Rallying To Start '25

Bund and Tsy futures are off Asia-Pac lows, with weakness in Chinese equities and a subsequent pullback from session highs in European equities noted.

• Nothing particularly actionable in final Eurozone & UK manufacturing PMIs.
• A bid in crude oil has done little to counter the bond rally.
• Bearish technical themes intact across the major futures contracts, although Bund futures pierce Monday’s high at typing.
• German yields 2.5-4.0bp lower, curve bull steepens.
• UK yields 3bp lower to 0.5bp higher, curve twist steepens.
• Tsys outperform on the day, 1bp tighter to Bunds, while gilts lag (catch up to late Tuesday weakness in Tsys), widening by ~2.5bp vs. German paper.
• The former spread is below 220bp, with the latter above the same level, both sticking to multi-week ranges.
• EGB spreads are little changed to 1.5bp wider vs. Bunds, with OATs under widening pressure to start ‘25.
• No real fresh headline cues out of France, but well-documented fiscal and political risks present structural headwinds.
• Initial jobless claims data from the U.S. is due later in the day.
• Austria has confirmed next week’s auction plan and Ireland outlining its Q1 issuance intentions (see previous bullets for more on those matters).
• EGB syndication announcements and corporate issuance are likely to pick up next week.