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Stabilising After Yesterday’s Sell Off

BONDS
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Bonds have ticked away from yesterday’s lows, with the 2.60% 10-Year yield level holding. Still, Bund futures are little changed on the day.

  • Benchmark German yields are 0.5-1.5bp lower across the curve.
  • A bearish technical backdrop remains intact, with support seen at yesterday’s low in Bund futures (130.03) and that 2.60% 10-Year yield level presenting the initial target for bears.
  • There hasn’t been much in the way of meaningful headline flow to go off, with already delivered ECB-speak providing familiar soundbites.
  • Broader cross-market conditions have been a little more supportive of carry plays, with the USD lower and credit a little tighter, fading some of yesterday’s moves. Equities have also edged away from worst levels after earnings from large U.S. tech names applied pressure after the NY cash close yesterday.
  • This leaves most peripheral paper little changed to a touch tighter, allowing SPGBs to look through increased political risk.
  • Click for deeper Spanish colour from our political risk team.
  • Gilts also recover from yesterday’s lows. Futures last +15, with benchmark yields ~2bp lower across the curve. Yesterday’s lows present the initial bearish targets.
  • There is only lower tier Eurozone data due today, with no EGB issuance tabled. That will leave focus on the remaining ECB-speak (don’t expect a change in tone there), U.S. data and Tsy supply.
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Bonds have ticked away from yesterday’s lows, with the 2.60% 10-Year yield level holding. Still, Bund futures are little changed on the day.

  • Benchmark German yields are 0.5-1.5bp lower across the curve.
  • A bearish technical backdrop remains intact, with support seen at yesterday’s low in Bund futures (130.03) and that 2.60% 10-Year yield level presenting the initial target for bears.
  • There hasn’t been much in the way of meaningful headline flow to go off, with already delivered ECB-speak providing familiar soundbites.
  • Broader cross-market conditions have been a little more supportive of carry plays, with the USD lower and credit a little tighter, fading some of yesterday’s moves. Equities have also edged away from worst levels after earnings from large U.S. tech names applied pressure after the NY cash close yesterday.
  • This leaves most peripheral paper little changed to a touch tighter, allowing SPGBs to look through increased political risk.
  • Click for deeper Spanish colour from our political risk team.
  • Gilts also recover from yesterday’s lows. Futures last +15, with benchmark yields ~2bp lower across the curve. Yesterday’s lows present the initial bearish targets.
  • There is only lower tier Eurozone data due today, with no EGB issuance tabled. That will leave focus on the remaining ECB-speak (don’t expect a change in tone there), U.S. data and Tsy supply.