Fixed Income: cross-asset inflows inspire more upside

Bunds and even fundamentally challenged Gilts have extended recovery gains as bonds benefit from the final position and portfolio tweaking for month end, while specs and shorter term traders appear to be taking stock ahead of the big risk events to come (US refunding, FOMC and NFP). The 10 year Eurex benchmark has been as high as 159.26 (+35 ticks on the day) and its UK equivalent to 122.55 (+17 ticks) amidst some blocked flows at 122.51 (3k lots in 1500 clips). USTs also firmer and re-flattening after Tuesday’s long end underperformance when the 30 year yield got to within a few basis points of the 3% mark. Back to Bunds, a bit more loss of momentum on firmer core Eurozone inflation just as ECB’s Coeure warns about the market not factoring in the prospect of higher prices, and perhaps with Germany’s new Bobl offering also impacting.