This morning’ action in bonds is a continuation of friday’s.
Curve is flatening further in the Euro zone with schatz (2y) going down and bobl(5y) getting hit hard. Bunds(10y) are following timidly so far still above 122.32 support. Tnotes(5y and 10y) have taken out their support. Gilts are so far the best performers. Much of the talks center around the “zero” rates in the Tbills (is it compatible or not with the rally in the stock and commo markets ?), how long “the extended period” will truly last (with Bullard’ comments not yet digested). There is little talk about the actions by the central banks to withdraw some of their liquidity measures but market price action tends to demonstrate that they are the main preoccupation of bond traders.
In the stock market the early rally in the Eur/Usd helped the market go bid right from the open, the correlation is still well in place with the forex sphere leading the move and the catchup game very much in focus. Ftse still the winner, and eurostoxx lagging behind. The S&P is still overperforming european stocks big time, and a correction might be seen (daily charts).