Risk-On Tone Has Core FI Testing Month's Lows

Global core FI is weaker with curves trading mixed in Thursday's European morning session. The German (yields up 4.5-6.5bp) and US curves (up 1-2.5bp) have bear steepened, with the UK trading parallel out to 10Y (up 4-4.5bp).

• With markets open but liquidity thinned on Ascension Day in much of Europe, Bunds are underperforming global counterparts in a decisively risk-on session buoyed by optimism over a debt limit deal (stocks are higher alongside the USD).
• Front futures are trading at session lows, with TYs and RXs nearing May's lows, and Gilts plumbing April's worst levels.
• Periphery spreads are largely unchanged with the exception of Greece, with GGBs now trading 22bp inside BTPs, the largest gap since July 2022.
• BoE officials are speaking to the Treasury Select Committee as we publish this note; we also hear from FOMC participants Barr, Jefferson, and Logan.
• US data up later includes jobless claims and existing home sales, while supply consists of $15bln 10Y TIPS reopen.

Latest levels:

• Jun US 10Y futures (TY) down 3.5/32 at 114-15 (L: 114-13 / H: 114-24)
• Jun Bund futures (RX) down 78 ticks at 134.69 (L: 134.62 / H: 135.44)
• Jun Gilt futures (G) down 61 ticks at 99.75 (L: 99.74 / H: 100.11)
• Greek / German 10-Yr bond spread down 4bps at 162.3bps