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Bond Market Insights - Fri, 28 Apr 2023

The economic data was a net negative for equities, but was ignored with the focus on tech results. US GDP disappointed as US consumer spending was very strong. Q1 PCE overshot at +4% for headline and +4.9% on core. Mar PCE, which is more important than the full Q1 reading, will be released later today. The whole world is assuming that the Fed will be finished after this next 25bps hike, a strong Mar PCE print could dent this confidence.

Treasuries did pay attention and 2yr yields jumped 14bps. The 7yr note auction today was poor, and even with the market trying to hold the 99-28+ level after the auction results, like gravity, the 10yr fell to 99-22 support.

In European equities Barclays gained on an increase in fixed income revenues, while Deutsche Bank gained on cost cuts (boo… Consumers boosted Unilever despite recent price hikes.

China IG was 1-2bp tighter in quiet trading on Thursday. Traders pondered the new issue for State Bank of India 5yr, which had an initial price guidance of +185. It eventually came at +145, which is probably around fair value given that it is 57% government-owned. The issue size was expected to be $500mm, but robust demand took it to $750mm, compared to the last deal of $300mm, so it should trade with a slight liquidity premium aswell.

Today Asia IG is creeping tighter again by a couple of bps. Buyers are evident in the China space, and there is also interest in 10yr Thai and India paper.



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