US TSYS: Light Session To Date As Data Eyed
May-27 2022 10:45
- Cash Tsys have seen light overnight and European sessions as a gentle rally extends with the belly lagging.
- After sizeable rallies early in the week on sharply lower Fed hike expectations following a collection of weak US data, the moves since then have been relatively restrained, with front end yields continuing to edge lower whilst long-end yields have been relatively range bound for a steady bull steepening.
- 2YY -1.2 at 2.464%, 5YY -0.5bps at 2.704%, 10YY -0.9bps at 2.738% and 30YY -1.8bps at 2.964%.
- TYU2 replaces TYM2 as the most actively traded contract, up 3 ticks at 120-10. It’s well within yesterday’s range but sits just shy of the 50-day EMA of 120-15+.
- Data: A deluge with core PCE, personal incomes & spending, advance goods trade balance and wholesale inventories all at 0830ET before finalized UMich consumer sentiment at 1000ET.
- No Fedspeak or issuance today.
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BOND SUMMARY: EGB/Gilt: Gazprom Supply Cut Further Fuels Inflation Concerns
Apr-27 2022 10:41
European government bonds have lacked strong direction this morning while equities have broadly pushed higher.
- Gazprom's decision to cut gas supplies to Poland and Bulgaria has provided a further jolt for energy prices.
- German and French consumer confidence data for May and April, respectively, came in lower than expected as price pressures continue to intensify.
- Gilts have traded lower with yields up 2-4bp and the curve slightly bear flattening.
- The bund curve has twist flattened with the 2s30s spread narrowing 3bp.
- OATs have traced out a similar path with the curve flattening 3bp.
- BTPs have traded weaker across the curve with cash yields up 2-3bp.
- Supply this morning came from Germany (Bund, EUR1.704bn allotted), Italy (BOTs, EUR5bn) and Greece (GTBs, EUR625mn). In addition, the UK sold GBP1.8bn of the 0.125% Mar-73 via syndication with an order book in excess of GBP20.5bn.
STIR FUTURES: Fed Pricing Back Up Near Yesterday AM Levels
Apr-27 2022 10:22
- Pricing a 51bp hike for the May meeting, 106bp for June, 192bp for Sep and 238bp to year-end.
- Light data docket but the MBA mortgage data could be of note after the 30Y contract rate last week touched the highest since Apr-2010 at 5.20%.
- The Senate confirmed Brainard as Vice Chair yesterday (52-43) as expected but the vote for the three other nominees could be delayed with Covid absences preventing Democrats from proceeding with Cook’s vote.
Source: Bloomberg
BUNDS: Greek/Bund spread test resistance
Apr-27 2022 10:16
- With the Greek 10yr Yield back above 3.00%, did print a 3.134% high yesterday, now at 3.092%.
- The Greek/Bund spread is wider by another 9bps, and testing through initial resistance at 223.69, now at 224bps.
- Above the latter, opens to 229.72bps, the 11th March high (widest)
