Fixed Income: Gilts and UK construction PMI both on the edge

A near escape for the UK’s construction sector, with the headline only just maintaining expansion in January, and this has helped Gilts stave off a more concerted challenge of the 121.00 level, for now at least. However, the core debt future has been down to 121.12 for a 68 tick decline from Thursday’s close as the 10 year yield approaches 1.6%, while Bunds have already extended Eurex losses to 158.00 (-60 ticks), which equates to 0.75% in cash terms. In short, bond bears remain in the driving seat with 10 and 30 year US Treasury yields now topping 2.80% and 3.05% respectively, and the benchmark 10s T-note future looking vulnerable only just above 121-00. US jobs data the next key risk event and 200k or above with consensus or better earnings could be the trigger for fixed to fall further.