02/04/2014

TY 30min

A failure for 10s to get back into a 124. handle before the end of March sees an optimistic "risk on" start to April. Long end is now revisiting the FOMC lows after a brief spell of profit taking from Steepener positions.
This is ECB week, based on what Draghi has said in recent weeks I'm going for an unchanged on Thursday. Despite all the member chatter re QE and other tools, CPI wasn't bad enough to justify any immediate action and the member chatter is doing a decent enough job of weighing on the Euro when it gets buoyant.

Bund 30 min

This morning has seen us head for recent lows. I for one will not be considering going against this move until we test 142.90 area. Reasonable data out today that could influence direction around that level includes Eu gdp & from the US adp.


€ curve

 

Long term momentum has started to turn on Schatz related curve. Short term is very "buy the dips" plan at the mo. As Euro data improves( or just doesn't get worse) rate cut and special measures talk disappear. So on a rates front we look more at the US & UK for drivers. This will only add to steepener tone to curves. Don't get me wrong Europe is not out of the woods I just sense longer we go without any bumps in the road the more German Finance minister Shaeuble comments will spread through to ECB member voices. ECB will have to raise rates at some point.

€ teds

With the long end weaker the Schatz teds resume their trend higher...This despite the Euribor feeling rather heavy right now as rate cut bets get taken out. Doesn't look like too many wanna be long into Thursday. Bobl teds been in the sweet spot zone for a month now. Nice range trading to be had providing you're patient. Execution is tricky as we are all watching the same movie

 

 

Bobl Auction out this morning, could influence bobl/bund temporarily.

 

Good luck.

Lee