Data and forex developments battled for attention today and after a stronger than expected German Ifo reading saw yields recovering early losses, a weaker than expected U.K. CBI retailing survey knocked yields off highs. The 10-year Bund yield is down -0.2 bp at 0.581% now up from early lows of 0.561% and after touching highs above 0.59%. The 10-year Gilt is unchanged at 1.405%, pretty much in the middle of today’s 1.393%-1.4175% seen today. 2-year yields are slightly higher, leaving the curve somewhat flatter. Equity markets improved as euro and pound moved off the highs against the dollar seen earlier in the session. German GfK consumer confidence also came in higher than anticipated, but the details of the Ifo, which showed the expectations reading falling sharply were in fact bond friendly and with the euro at very high levels, there will be some pressure on Draghi not to rock the boat too much and send the euro even higher. On balance we continue to see the ECB remaining cautious as it moves towards the phasing out of net asset purchases. But as ever watch for comments on Inflation, the new stronger Euro, and comments on interest rates.
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Senior Market Analyst
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