May 26, 2023 09:25 GMT
Treasuries Outperforming Pre-PCE
US Treasuries are outperforming in European morning trade Friday, with Bunds trading constructively and Gilts steadier following their sell-off earlier this week.
- Yields have pulled back from session's highest levels, with Bunds notably retracing after testing the Mar 10 high of 2.557% - helping the rest of core FI pare losses.
- Gilt yields are flat on the session, with stronger-than-expected retail sales data offset by poorer revisions to prior.
- With attention remaining on debt limit negotiations going into the Memorial Day weekend (including a shortened session today and most US markets closed Monday) 10Y Tsy yields are down 3bp.
- A very slight steepening bias has been seen so far, with peak rate pricing pulling back for the BoE (-4bp), Fed (-3bp) and ECB (-2bp). But all foreseen terminal rates remain well above levels at the start of the week.
- No major supply or central bank speakers expected for the rest of the session, but we get a busy US data schedule ahead of the long weekend including PCE, durable goods orders, inventories, and final UMich survey.
- Jun US 10Y futures (TY) up 4/32 at 112-24 (L: 112-15.5 / H: 112-26)
- Jun Bund futures (RX) down 30 ticks at 133.32 (L: 132.83 / H: 133.34)
- Jun Gilt futures (G) down 9 ticks at 94.58 (L: 94.13 / H: 94.78)
- Italy / German 10-Yr spread 1.2bps wider at 188.8bps
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