EUROPEAN FIXED INCOME UPDATE: debt indigestion after Central Bank-fest

Analysis details (10:54)

Long liquidation ahead of US labour data and general consolidation after such big moves are likely contributors behind the bubbles bursting in bonds, but there may also be an element of reappraising guidance from the ECB especially in context of the deeper reversal in EGBs and post-meeting rhetoric via GC members. In short, several have echoed President Largarde in qualifying that evaluation after another 50 bp hike in March does not necessarily mean a pause, let alone end in the tightening cycle as rates are not expected to have peaked by the end of Q1. Looking at prices in detail, Bunds have been down to 138.56 for a 137 tick retracement from Thursday peak, Gilts sub-107.00 at 106.89 having hit 107.78 yesterday and the T-note is nearer 115-13+ than 115-22+ extremes vs 116-00 at best in the previous session.  Also ahead, US services ISM and more Central Bank speakers slated including BoE’s Pill and ECB’s Elderson.

03 Feb 2023 - 10:54- Fixed IncomeResearch Sheet- Source: Newsquawk