BONDS: Europe and US Govies extend their fall.
Nov-03 09:49
- EGBs and Bund were sold from the get go, on the Bund cash open, a follow through, following the Hawk Fed yesterday.
- Bund and BTP futures open gap lower, overnight for Bund and on the cash open for BTP.
- The Italian 10yr saw a 129 ticks lower gap, but futures are off their lows at the time of typing.
- Gilt saw similar move with just over 100 ticks opening gap.
- The Gilt/Bund spread continues to tighten, by just 1.5bps so far today, but the spread is at its tightest level since the 31st August.
- Support is at 1.20bps, now trading at 122.00bps.
- Treasuries have led lower with some notable clip seller on the European open.
- Next support in TYZ2 is seen further out, towards 109.13.
- Looking ahead, the main focus is on the BoE and an expected 75bps hike, as well as Bailey presser.
- Out of the US, on the data front, today include US Services PMIs, but final reading.
- US Factory orders and ISM Services Index are the notable data for this afternoon.
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GILTS: Has gained 993 ticks in the past 5 sessions
Oct-04 09:47
- An impressive 993 ticks gains for Gilt in 5 sessions, including today (and counting).
- Next upside target is at 101.00, printed a 100.92 high.
BELGIUM T-BILL AUCTION RESULTS: 3-month TCs
Oct-04 09:42
| Maturity | Jan 12, 2023 |
| Amount | E1.202bln |
| Target | E0.8-1.2bln |
| Previous | E1.525bln |
| Avg yield | 0.745% |
| Previous | 0.588% |
| Bid-to-cover | 2.62x |
| Previous | 1.72x |
| Previous date | Sep 13, 2022 |
BONDS: Rally Extends As Terminal Hike Pricing Fades Further
Oct-04 09:38
Yields are down across the major curves early Tuesday, with the short end outperforming in a (mostly) bull-steepening move.
- The RBA's decision to scale down rate hikes in its decision overnight (25bp vs 50bp expected) has kept downward pressure on central bank terminal rate expectations. Fed rates are seen getting to a peak of just below 4.4% in March, vs closer to 4.5% at end-Sept and 4.8% highs early last week.
- This has helped risk assets rally with the USD remaining under pressure; periphery EGB spreads are tighter too.
- Once again it's the UK long end underperformance that sticks out: today, a very weak Oct-61 Gilt auction (widest tail since 2018) pushed 30Y yields above 3.90%.
- Up later today are US durable goods data, Fed speakers including Daly, Jefferson, Logan, Mester, and Williams, with ECB's Lagarde appearing as well.
Cash yield update:
- US: 2-Yr down 8.7bps at 4.0266%, 5-Yr down 7.4bps at 3.8039%, 10-Yr down 4.7bps at 3.5913%, 30-Yr down 2.1bps at 3.6576%.
- DE: 2-Yr down 13.1bps at 1.489%, 5-Yr down 14.4bps at 1.623%, 10-Yr down 10.5bps at 1.812%, 30-Yr down 5.6bps at 1.866%.
- UK: 2-Yr down 19.7bps at 3.856%, 5-Yr down 17.9bps at 4.047%, 10-Yr down 12.8bps at 3.836%, 30-Yr up 1.7bps at 3.905%.
- Italy / German 10-Yr spread 4.2bps tighter at 228.7bps
