EU MID SESSION UPDATE
Geopolitical tensions dominated the market sentiment on Monday. Thats after South Korea conducted live-firing drills. However despite threats last week, there was no retaliation from its neighbour and in fact, a North Korean official said that it doesnt feel the need to respond to all military provocations. The risk averse sentiment saw the German Bund future briefly move above 125.00, aided by light volumes and a trigger of buy stops. Since then, prices have retreated but remain in positive territory. Elsewhere, peripheral bonds yield spreads have widened today, led primarily by the Belgian 10y bond following vague market chatter of an imminent sovereign downgrade. Worth noting that last week saw S&P rating agency put the country on rating watch negative. As such, the EUR has underperformed today as concerns continue to linger how weaker states will deal with looming 2011 debt refinancing obligations. Elsewhere, despite the risk averse sentiment, GBP remains higher against the greenback and the EUR following reports from the CBI which sees the BoE hiking rates within six months in order to curb inflation.
Source: RANsquawk
Geopolitical tensions dominated the market sentiment on Monday. Thats after South Korea conducted live-firing drills. However despite threats last week, there was no retaliation from its neighbour and in fact, a North Korean official said that it doesnt feel the need to respond to all military provocations. The risk averse sentiment saw the German Bund future briefly move above 125.00, aided by light volumes and a trigger of buy stops. Since then, prices have retreated but remain in positive territory. Elsewhere, peripheral bonds yield spreads have widened today, led primarily by the Belgian 10y bond following vague market chatter of an imminent sovereign downgrade. Worth noting that last week saw S&P rating agency put the country on rating watch negative. As such, the EUR has underperformed today as concerns continue to linger how weaker states will deal with looming 2011 debt refinancing obligations. Elsewhere, despite the risk averse sentiment, GBP remains higher against the greenback and the EUR following reports from the CBI which sees the BoE hiking rates within six months in order to curb inflation.
Source: RANsquawk