Shy Of Highs, JGB Pressure Still Felt

Core global FI markets operate off best levels as NY participants start to settle in.

• The impetus from JGBs (market digestion of recent BoJ speak/speculation re: BoJ policy moves and a poorly received 30-Year auction) provided the focal point in pre-London trade, before a softer-than-expected German industrial production print helped put a base on the space.
• The ensuing rally saw 10-Year Bund yields look below their May double bottom, but the breach was relatively limited and the move has faded from extremes.
• German yields are 1bp lower to 1.5bp higher as the curve twist steepens.
• Cash Tsy yields are 2.0-5.5bp higher on the day, with 7s coming under the most pressure. Weekly jobless claims data headlines the NY data docket, although be wary of holiday-induced volatility/seasonal adjustment skew. TY downside plays via options have dominated pre-NY Tsy options flow.
• Gilt yields are 3-5bp higher on the day, futures have failed to get anywhere near closing the opening gap lower (inspired by Asia-Pac price action). Most of the domestic focus has fallen on record take up at the BoE’s short-term repo operations, Sell-side names have flagged arbitrage opportunities as a driver there (take up remains sub-GBP5bn).
• Less cross-market impact from oil today, with bulls failing to retake $70 in WTI futures on a sustained basis thus far.