EUROPEAN FIXED UPDATE: Initially contained trade has given way to a modest EGB bid, USTs remain subdued post-Waller

Analysis details (10:30)

• At first, core benchmarks were relatively rangebound in the European morning, with the benchmarks struggling to derive any lasting traction from brief forays some 30/40 ticks either side of the unchanged mark. However, a concerted bid has been seen most recently with the Bund currently towards the top-end of 138.26-139.26 parameters having breached 139.00 though is still capped by the 50% fib of Friday’s move at 139.39. Action has perhaps been sparked by remarks from ECB’s Panetta which, while in-fitting with his dovish disposition, have placed emphasis on the risk of policy errors which may not be evident today.


• Panetta aside, fresh drivers specifically for the complex have been fairly thin with attention focused on the substantial amount of weekend newsflow and on the Biden-Xi meeting, which is currently underway and could potentially continue for several hours.


• Stateside, UST’s are a touch softer and are playing catchup to the Veteran’s Day holiday on Friday and also conscious of remarks from Fed’s Waller who has pushed-back on the post-CPI pricing, remarking that the print is "just one data point” and markets are "way out in front". As such, USTs are lower by a handful of ticks towards the mid-point of 111.27+ to 112.06+ parameters with yields elevated though the 10yr is sub-4.00% and significantly shy of last week’s 4.24% peak.


• Finally, Gilts are moving in-line with EGB peers and are now bid but, again similarly, spent much of the morning within relatively narrow parameters as participants look towards Thursday’s Autumn Statement. Ahead of which, Chancellor Hunt has indicated the OBR’s forecasts will paint a similar picture to the BoE regarding a recession while the Energy Price Scheme is seemingly likely to be adjusted from April onwards. For reference, Gilts are currently just off the session's 104.93 peak.

14 Nov 2022 - 10:28- Fixed IncomeResearch Sheet- Source: Newsquawk