Forex - US, Eurozone Bond Flows: EM woes help bid core out of range as TRY blows out

 07:37 (GMT) 10 Aug

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EM pressure spilt over into Asia, with equities down, while in Europe, banks are pressured and periphery dragged by concerns over EZ especially Italian bank exposure to Turkey. USD/TRY is still up some 6.3% on the latest blow out move, even as it comes off the 6.286 highs back to 5.88.

The euro bank index is down over 2% and IT2s still up 9bp, the latter despite some reassurances on press reports that Italy is planning a 2019 Budget deficit of 1.7%. The BTP future is at least off the morning's 124.78 low to 125.20, to be only modestly net down. Bunds beneifting the most still though from Torkey related safety demand with a high volume gap higher. Bunds jump has the future clear 163 to be running into the July tops. USTs also finally see a range breakout, somewhat unexpectedly taking out 2.91% with this injection of excitement, with 10s pulling back towards the 2.88/89% July tops / break level.

Key now is whether this proves a flash in the pan that core bonds lose interest in or whether we see a more extended injection of volatility and safety bid in thin summer markets

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