EUROPEAN FIXED INCOME UPDATE: post-NFP hawkish repricing continues, with BoE’s Mann adding to the tone

Analysis details (10:45)

• A continuation of Friday’s post-NFP hawkish repricing has pushed Bunds to retest Thursday’s 137.00 trough after opening just below the post-NFP 137.70 low this morning. Fresh newsflow has been gradual with the docket relatively thin aside from a handful of Central Bank speakers due later from the BoE and ECB following commentary this morning which has seen hawkish officials from both institutes stick to their known stances.


• Specifically, BoE’s Mann said she believes the next move will likely be another hike over holding/cutting, adding that a “tighten-stop-tighten-loosen policy boogie looks too much like fine-tuning to be good monetary policy.". In the wake of this, Gilts slipped to a 106.29 low at the time; a trough that has since been significantly eclipsed with the contract down to 105.75 as the session’s broader hawkish tone intensifies. As such, Gilts are the current underperformer with the associated 10yr yield up to 3.20%, though it remains shy of the 3.26% peak which printed in an immediate reaction to the BoE’s 50bp hike and before the meeting was digested in full. For reference, that session’s Gilt low was 105.09, which itself is a full point above the 104.04 base on January 30th.


• Stateside, the picture is very much the same as above. With the post-NFP hawkish repricing in full swing as participants await guidance from numerous Fed officials this week, with Chair Powell on Tuesday the on-paper highlight. Ahead of this, US yields continue to lift with action much more pronounced at the short-end of the curve; nonetheless, the 10yr yield has printed a 3.616% peak, with the 10th January’s 3.63% next ahead of the YTD 3.84% best.

06 Feb 2023 - 10:40- Fixed IncomeResearch Sheet- Source: Newsquawk