Bond Traders Weekly Outlook: Europe, Over Tightening and Recession Fears

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    U.S. Treasuries higher start with longer tenors expected to show relative strength in the early going.

    Treasury futures began the overnight session quiet but began rising during Asian trade. The advance continued through the night, producing highs during the past hour.

    Overnight trade featured a lower showing from Asian equities, followed by modest losses in European stocks. Sovereign debt, meanwhile, trades mostly higher. Economic data released overnight showed smaller than expected November credit growth in China while October growth figures from the U.K. exceeded expectations.

    U.S. Treasury will sell $40 bln in 3-yr notes this morning, followed by a $32 bln 10-yr note reopening in the afternoon. The U.S. Dollar Index is down 0.1% at 104.73.

    2-yr: -2 bps to 4.32%
    3-yr: UNCH at 4.07%
    5-yr: -3 bps to 3.73%
    10-yr: -4 bps to 3.53%
    30-yr: -4 bps to 3.51%


    Early Bonds: U.S. Treasuries higher start with shorter tenors expected to show slight relative strength.

    2-yr: -3 bps to 4.23%
    3-yr: -2 bps to 3.94%
    5-yr: -2 bps to 3.63%
    10-yr: -2 bps to 3.48%
    30-yr: -1 bp to 3.53%


    U.S. Treasuries trade just below opening levels with longer tenors remaining behind. Treasuries followed their lower start with a slip to fresh lows at the end of the opening hour of action, but that move was reversed just as the market received the flash IHS Markit Manufacturing and Services PMI readings for December, which slipped further into contraction from their final November levels.

    Barring a volatile finish, the 10-yr note and shorter tenors are on course to register gains for the week while the long bond is down modestly since last Friday with its yield up three basis points for the week at this time.

    2-yr: +1 bp to 4.26%
    3-yr: +2 bps to 3.97%
    5-yr: +5 bps to 3.67%
    10-yr: +8 bps to 3.53%
    30-yr: +8 bps to 3.58%


    U.S. Treasuries saw strength in the shorter tenors reflecting a manifestation of inflation related Fed overtightening and forced recession fears. Euro
    [See the full post at: Bond Traders Weekly Outlook: Europe, Over Tightening and Recession Fears]

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