Bonds are on the back foot after a stellar German IFO print that showed the Eurozone’s most important economy is hitting on all cylinders.
That was a welcome development given what we’ve seen over the previous two sessions in the DAX, which was weighed down by concerns about automaker collusion and a stronger euro.
Now we’re seeing all kinds of pressure on bonds as yields jump, building on something that started a few hours ago when we got a $1m DV01 block sale in TY futures (12,792 at 126-00+).
“Another wave of selling was evident after the trade was published, potentially spooking the market, given the size at this time of the day,” Bloomberg writes, before adding that this very well could be a partial unwind of a $2.9m/DV01 position established via blocks last week. This is from traders:
Needless to say, that drove the yen lower as USD/JPY broke through Monday’s high:
Here’s bund yields:
As Bloomberg reminds you, this comes ahead of a $26b 2Y auction which should be interesting following yesterday’s bill sale.