The rally continues

Core fixed income has continued its move higher this morning with 10-year and 30-year UST and gilt yields at their lowest levels since mid-February, 10-year Bund yields approaching mid-June lows (30-year their lowest levels since March).

• The continued rally in fixed income is in contrast to the moves higher in oil and equities.
• Economic data has generally been disappointing today again. German IP fell for a second consecutive month (albeit with the prior month revised a bit higher). Italian retail sales also missed expectations.
• Looking ahead, attention turns to the FOMC Minutes (and JOLTS to a much lesser extent). The Minutes will be read closely for any views from Fed members that inflation may not be transitory and for any tapering timing hints (or hints of the process of tapering e.g. MBS first).
• TY1 futures are up 0-5 today at 133-12 with 10y UST yields down -0.4bp at 1.346% and 2y yields up 0.5bp at 0.225%.
• Bund futures are up 0.20 today at 173.80 with 10y Bund yields down -1.3bp at -0.282% and Schatz yields down -0.1bp at -0.683%.
• Gilt futures are up 0.01 today at 129.11 with 10y yields down -0.8bp at 0.625% and 2y yields up 0.1bp at 0.046%.