EUROPEAN FIXED INCOME UPDATE: debt resurgent after initial reservations

Analysis details (10:55)

High octane trade, volatility levels and big ranges in bonds already marked out before the remaining risk events on the last trading day of the month, and with NFP still to come on Friday. Bunds have spiked from 131.83 to 132.87 after the knee-jerk retreat in response to hot French inflation metrics and remain elevated regardless of rather conflicting commentary from ECB’s Holzmann. Instead, it appears that the less hawkish tones from Schnabel and a soft EZ core HICP have been more influential in terms of overall direction, but one cannot ignore the duration demand factor. Gilts have also been whippy within 94.66-95.28 bounds and understandably given somewhat mixed messages from BoE’s Pill who started by underlining persistent price pressures due to second round effects that could become embedded, but ended with a stated tendency towards keeping rates steady for longer. Elsewhere, more sedate price action in the T-note between 110-24+/111-00 confines and likely keeping something back for the busy US slate. 

31 Aug 2023 - 10:55- Fixed IncomeResearch Sheet- Source: Newsquawk