Traders still had plenty to watch on Tuesday ahead of the key U.S. numbers and Thursday’s European Central Bank meeting, as Britain reported a rise in its unemployment rate that means the Bank of England’s expected rate rise next week might be its last.
“I think underscores the likelihood of just one more and then done for the Bank of England and more of a bull steepening in the gilt market while we have had bear flattening elsewhere where higher oil prices have dominated the narrative,” said Chris Scicluna, head of research at Daiwa Capital Markets.
The 10-year German bund yield, the regional benchmark, held steady at 2.62% after recent gains, while the U.S. 10-year yield was steady at 4.278%. China’s yuan also had its best day in six months on Monday, after authorities vowed to correct one-way moves and Reuters reported the central bank had stepped up scrutiny of dollar buying.Also in Asia, investors in China drew some comfort from news that the country’s largest private property developer Country Garden has won approval from creditors to extend repayments on six onshore bonds by three years.
“A lower-than-expected print may slow the U.S. dollar’s rise while higher print could potentially un-nerve risk sentiments as it would reinforce market expectations for further rate hikes, and this could fuel dollar strength,” said OCBC strategist Christopher Wong.