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Bond Market Insights - Mon, 24 Apr 2023

An early bid for USTs was reversed after a stronger-than-expected April PMI print, pushing 2yr yields up by 10bps to close at 4.17%. The composite index rose for the 4th consecutive month and at 53.5 is the highest since last May. Short end futures followed suit, with the terminal rate hovering near 5.13% presently with 30bps priced in by May.


The focus for the Fed this week will be the Q1 Employment cost index on Thursday and the core PCE deflator for March, and Q1 employment cost index, both on Friday. In Europe keep an eye on inflation and GDP data. Then next week is the long awaited May FOMC.


Today on the short end CME Group will convert all eligible Eurodollar futures and options to SOFR equivalent contracts today. April, May and June 2023 futures are excluded and will trade until expiration. LCH is proposing its main conversion on May 20th. https://tinyurl.com/469c7mfa


The Bank of Japan decision on Friday looms large on the calendar this week, with some calling for the Yield Curve Control policy to be abandoned.


Asia remains pretty clueless presently, with all eyes on macro events. Cash levels remain high, which should lend some support in these low volume times. Mongolian Mining has announced an exchange and concurrent tender offer on the $345.3mm outstanding of MONMIN 9 ¼ 04/15/24 Reg S notes. Details available upon request


Today we have opened unchanged. India has seen good onshore buying from both Life Insurance and banking accounts. Adani, a performer last week, announced a tender offer (an offer to purchase a substantial percentage of the securities) for ADSEZ 3 ⅜ 07/24/24 over the weekend.

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