BONDS: EGBs-GILTS CASH CLOSE: German Yields Resume Recent Uptrend
Jul-10 16:23
EGB yields resumed their recent uptrend Thursday, with Gilts outperforming Bunds.
- There was once again no overt macro headline or data driver for Bund and broader EGB weakness, with the prevailing theme continuing to be expansionary German fiscal policy.
- Solid US jobless claims data also contributed to global core FI weakness in the afternoon through the cash close.
- Fiscal policy remains a concern in the UK too, but Gilts continued to consolidate from last week's spike.
- European data was second-tier, with Italian industrial production coming in weaker than expected, and German final June inflation confirming the flast estimates.
- The German curve bear steepened on the day, with 10Y yields seeing their highest close since April 2 and 2Y since May 15. The UK curve bull steepened.
- Periphery/semi-core spreads were mostly wider to Bunds, with Spain/Portugal notable outperformers.
- Friday's data highlight is UK monthly activity/GDP, with appearances by ECB's Panetta, Vujcic and Cipollone.
Closing Yields / 10-Yr EGB Spreads To Germany
- Germany: The 2-Yr yield is up 3bps at 1.89%, 5-Yr is up 3.4bps at 2.273%, 10-Yr is up 3.2bps at 2.705%, and 30-Yr is up 4.1bps at 3.203%.
- UK: The 2-Yr yield is down 2.4bps at 3.856%, 5-Yr is down 1.5bps at 4.026%, 10-Yr is down 1.7bps at 4.595%, and 30-Yr is down 1.6bps at 5.406%.
- Italian BTP spread up 0.3bps at 85.4bps / Spanish down 0.8bps at 61.4bps
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FOREX: GBP Remains Moderately Lower Post Soft UK Labour Market Data
Jun-10 16:23
- Currency markets have traded in a more subdued fashion Tuesday, as market participants continue to await any details on developments regarding US/China trade talks, which remain ongoing in London as the European session comes to an end. As of 1730BST, the dollar index is just 0.1% green, giving back a small portion of yesterday’s decline.
- GBP if off its worst levels, but remains a standout underperformer following the softer set of UK labour market data releases. Weakness in GBP came in two phases in early trade, first on the weak payrolls data, and then again on the SONIA open, with GBPUSD briefly piercing 1.3462, its 20-day EMA. A clear break of this average would suggest potential for a deeper correction and expose the 50-day EMA for direction, at 1.3299. Cable has since recovered back above 1.35 as we approach the APAC crossover.
- EURGBP stands 0.35% higher on the day, and in the process has breached a key short-term resistance at 0.8440, the 50-day EMA. A clear break of the average is required to highlight a stronger reversal, potentially exposing 0.8541, the May 02 high.
- Dips below the 0.8400 handle have been well supported in recent months, and key support has been defined at 0.8356, the May 29 low. Clearance of this level would be required to resume the technical downtrend.
- USDJPY had some early volatility on Tuesday, as initial Ueda comments prompted the pair to trade up to 145.29 and eclipse the post-payrolls high. Spot then subsequently moved lower following some temporary weakness for equities but found solid support between 144.40/50.
- Aside from potential headlines on US/China developments, all attention now turns to the US May inflation data due Wednesday, an important pre-FOMC steer.
FED: US TSY TO SELL $65.000 BLN 4W BILL JUN 12, SETTLE JUN 17
Jun-10 16:05
- US TSY TO SELL $65.000 BLN 4W BILL JUN 12, SETTLE JUN 17
FED: US TSY TO SELL $55.000 BLN 8W BILL JUN 12, SETTLE JUN 17
Jun-10 16:05
- US TSY TO SELL $55.000 BLN 8W BILL JUN 12, SETTLE JUN 17
