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

Forex - Eurozone Bond Flows: BTPs drift after recent whipsaw; more from Di Maio

 10:31 (GMT) 09 Aug

Dep.PM Di Maio on Reuters saying confident that dialogue with EU will allow passage of pension reform, tax cuts and citizen's income, that in coming months can win EU backing for more Budget leeway. Perhaps a bit more tactful than yesterday's more confrontational comments, but still the same aim. BTPs left narrowly mixed this morning, running out of steam after recent whipsaw action. The market has now got more used to the mixed rhetoric from different government players and left waiting in slightly defensive mode to see how this pans out in practice next month. 1% has been capping 2s at least.

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