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Rinban Due

US TSYS

Early Asia Bid, As Omicron Shows Up In NY State

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Auckland Exits Lockdown

AUSSIE 10-YEAR TECHS

(Z1) Near-Term Strength Persists

AUSSIE BONDS

AUCTION PREVIEW: ACGB Apr-24 Supply Due

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(Z1) Neutral at Higher Levels

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  • There were some huge moves in the short sterling strip last week and these have been followed up this morning with more large moves after BOE Governor Bailey sounded concerned about rising inflation expectations and that the Bank would have to act if they rose. Since the weekly close on Friday 8 November, the Dec21 contract is now over 30 ticks lower and pretty much fully pricing in rates at 0.50% by year end (40bp of hikes). Other Whites and Reds are between 35-47 ticks lower, led by Sep22 down 47 ticks). Rates of 1.25% are pretty much fully priced by the end of next year. The curve then inverts through the Greens (Sep24-Sep23 spread is -10.5 ticks) and is then almost completely flat through the Blues. To us, these moves seem overdone and although we think that a November hike is looking increasingly likely, the MNI Markets team still looks for the first hike in December.