Europe Summary and Highlights 15 Oct
Bond and USD exhaustion and spike reversals continue after over stretched runs
UK GDP continues to hold resilient
AUD the exception after employment well below expectations
‘Sell the fact’ and exhaustive failed dollar extensions remain the theme into Europe, extending the turn-arounds through Asia, led by the swift U-turn in bonds, along with the ongoing regional tech and Kospi (-7%) led equity pressure. US10yr yields are now some 25bp off the post CPI highs, showing that strong demand is surfacing at these 5.25-30%+ levels.
Dollar-led action has EUR/USD back clear of 1.2, with 1.1250/75 area as bounce resistance. USD/JPY again saw strong supply on the test towards 159, and back onto the 157-handle with the regional pressure and yield turn.
French short end auctions pass by fine, albeit with slightly tepid bid/covers.
Cable also puts into a good bounce from the YTD lows test.
UK GDP continues to show better resilience than expected with a 0.1% gain, defying expectations for a 0.1% correction and with yr/yr back above 2%.
AUD the big underperformer on the day, after the employment report comes in weaker than expected at -39k vs mkt +20k, if led by part-time.