Although the Fed is talking about excessive liquidity, “extended period” seems here to stay and the central bank keeps dovish stance overall.
The ECB is also on hold for a while, but might be early in removing some liquidity (we’ll have to wait their dec meeting to see what happens with the famous 1y tender at fixed 1pct).
Bonds trading is dominated by these themes, year end approaching and not too worried about other assets price action.
US bonds are flying following the no reaction after the bad 2y auction monday and the yummy 5Y yesterday. Next hurdlle with the 7y. Yield Curve still close to steppest levels (huge steepener positions still in the market).
Bund are following to a certain extend but curve play seems the main preoccupation with some betting the ECB discussions will lead to a flatter curve.
Stocks are following asia action in the morning only to retrace all later during the scession.
Hence I’ll keep a close eye on the stock price action today as the forex sphere seems a little ahead of the stocks. That combined with some ACB selling in Eur/Usd I don’t want to be overoptimistic as far as the Eur/doll rally is concerned.
UK gdp will certainly give some action in the gilt and cable, but mainly in Eur/Stg…