Fixed Income: FTQ flows gathering momentum

Core bonds retreated a tad further earlier amidst some consolidation and respite in BTPs, but it’s back to liquidation if not capitulation in Italian debt as losses in 10 year futures reach more than 3 full points. Hence, Bunds have rebounded firmly from 158.40 to 159.00 and through resistance in the 158.88-90 area that had been capping the upside. 159.14 beckons next, then a 50% retrace of this month’s move to 159.36 and aside from any further BTP switching the German benchmark may well muster more impetus from positioning for month/Q3/Japanese half year end regardless. Elsewhere, Gilts have also recovered from a new Liffe intraday base of 120.88 to hit 121.25 and US Treasuries are firmer/flatter after Thursday’s part retracement of post-Fed moves, and ahead of a busy data line up including PCE inflation metrics.