Bonds more settled, but doves stir Short Sterling options

Core EU debt futures appear to have decamped into full NFP vigil mode and extremely narrow ranges within the 157.25-156.97 and 121.43-18 parameters seen so far, with Bunds and Gilts down around 14 ticks and ¼ point below previous closes respectively. However, more bullish/dovish flows seen in UK STIRs where the May 2018 99.25/375 call spread was bought vs the sale of 99.00 puts for 1.5 ticks in 10k lots and the package now said to have been accumulated around 25k times. This strategy looks for no BoE hike, and the market tightening probability has declined again to around 70% in wake of today’s UK data misses and ongoing hard Brexit risk.