Quiet start to 2023, bonds/dollar hoping for relief after bruising year-end
OVERNIGHT NEWS
# Bearish backdrop intact for bonds as 2023 gets underway. 10y Bund yield touched new high of 2.574% last week. IRS resumes at 3.20%, October high is 3.40%. ECB terminal rate repriced to 3.50% by July. Fed implied terminal rate 4.97% in May.
# Week ahead: German CPI tomorrow, Euro flash CPI and US NFP on Friday, FOMC minutes on Wednesday. China Caixin manufacturing PMI tomorrow.
# Croatia joined Eurosystem yesterday, became 20th country to adopt euro banknotes and coins. Croatia central bank capital key is 0.6595%. Assets located in Croatia fulfilling necessary requirements will be added to euro area list of eligible collateral.
# CFTC FX positioning: EUR longs up marginally to 20.1% of OI. GBP shorts raised to 5.6%, JPY shorts cut to 21.8%, AUD shorts raised to 28.5%, CAD shorts bumped up to 21.4%, CHF shorts up to 13.8%, MXN shorts reduced to 22.3%.
# Nikkei closed, Euro Stoxx futures +0.4%, EUR 10y IRS unchanged at 3.20%, Brent crude unchanged at $85.9/b, Gold unchanged at $1,824/oz./
EUR/USD slow to react to narrowing real Bund/UST yield differential
