Relatively Stable Ahead Of ECB & U.S. Data

Core global FI futures operate off of their respective session lows ahead of today’s scheduled tier 1 risk events (the ECB decision and run of U.S. data). Comments from Tsy Secretary Yellen are eyed later in the day, along with 7-Year Tsy supply.

• Cross-asset wise, benchmark European & U.S. equity indices are off yesterday’s highs given the uptick in core global FI yields over that horizon, while feedthrough from Tesla’s quarterly earnings report also weighed. A PBoC RRR-cut driven bid in Chinese & HK equities did little to support wider indices.
• U.S. Tsy yields are little changed to 2bp lower, with a recovery from overnight yield highs noted. A reminder that the flash S&P Global PMI data and soft demand at yesterday’s 5-Year Tsy auction applied pressure on Wednesday. Desks noted continued latent demand for Tsys during Asia-Pac hours, which seems to have become more pronounced around current yield levels (30-Year yields hit a fresh ’24 high in early Asia dealing).
• German yields are 1.5-2.0bp higher across the curve. 10+-Year benchmarks hit fresh YtD highs earlier but have backed away from those extremes.
• Gilt yields are 1.5-2.5bp higher. Gilt futures and 10-Year yields failed to test their mid-December extremes during the early sell off. BoE-dated OIS continues to show a slightly shallower rate cut path through ’24.