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Europe Fixed Income Summary

· 02/05/2021 01:44

06:38 AM EST, 02/05/2021 (MT Newswires) -- As of 6.35am ET, the stabilisation in bond markets hadn't lasted long and EGBs as well as Treasuries were already under pressure again. JGB yields still corrected -0.3 bp at 0.051% and Bunds initially also found some buyers as German orders corrected -1.9% m/m in December data. Focus quickly switched to U.S. payroll numbers though and yields were extending higher, with Gilts continuing to lead the way. The U.K. 10-year rate had jumped a further 4.6 bp to 0.48% this morning after yesterday's upbeat BoE guidance squashed any lingering hopes that the central bank would join the negative rate club The German 10-year rate was up 1.6 bp at -0.44% and 10-year Treasury yields were at 1.16%, up 1.6 bp on the day. Italian markets continued to outperform as investors buy into the prospect that former ECB head Draghi could be tasked with guiding Italy out of the pandemic. DAX and FTSE 100 were up 0.2% and 0.1% respectively, while the Italian MIB had jumped a further 1.3%. Markets were increasingly buying into the recovery story, which is keeping stocks underpinned and should continue to see yields gradually move higher as the chances of further easing are quickly receding even if central bankers are eager to slow the ascent.