USTs had an oopsie yesterday with 10Y and 30Y yields jumping 9 bps and 14bps to yield 0.76% and 1.54% respectively at the time of writing, with both at their 2.5-month highs. Investors reacted to Powell’s remarks in Jackson Hall with a sharp bear-steepener, unsatisfied with the vague announcement of a new inflation framework. Equity markets traded mixed. Shanghai Composite added 0.6%, Nikkei 225 on the other hand retreated 2%, as the Japanese PM Abe resigned today due to health reasons. DAX and FTSE 100 lost 0.7-0.8%, while S&P 500 edged up 0.2%. Oil continued to edge downwards with Brent at $44.93/b today.


German Bunds were quieter yesterday, with both 10Y and 30Y yields rising 7-8bps to -0.39% and 0.076% this morning. Periphery followed the move, with BTPS and SPGB followed the move with BTPS 49 yielding 2% this morning and SPGB 48 at 1.17%.


In Mena, the IG space mostly followed Treasuries moves. ADGB outperformed with spreads closing tighter and strong buying interest seen in the recently issued ADGB 31 and 70. KSA 60 continued to slide together with treasuries, down to 123.6 levels this morning, almost 11pts down from highs in early August.  In Corporates, Qatari MAARLA issued a 5Y sukuk yesterday, printing $750mn. The issue performed well, seen bid 1pt above reoffer.


In CIS, BELRUS was an outperformer yesterday, as the rumours that Russia may step in with a $1bn loan helped the bonds rally 2pts. UKRAIN 30 traded up 40-50c, while UZBEK 29 lost around 30c in price. The IG space showed some resilience to core rates with RUSSIA curve tightening 1-2bps in yield on the day and KAZAKS staying flat.


In Latam news, Brazil’s economy chief Paulo Guedes will stay in the job as long as President Jair Bolsonaro keeps the country on track to fiscal austerity, a government official said. Risk in Brazil recovered some of yesterday’s underperformance and ended the day flat-50c lower. Latam IG space followed USTs down and a lack of demand visible in the long ends of the curves. The new issue KOF 32 (Mexican Coca-cola) started the day well, seen bid up 40c from reoffer in early US time, despite coming tight to FV, however it later fell abruptly, falling down more than 1pt post Powell’s speech. In HY, news are out that Argentina won’t seek fresh funding from the IMF when it starts negotiations over a new program. Argent continued to trade around low-mid 40s.


SSA space was relatively quiet yesterday. NGERIA and SENEGL stayed flat to slightly higher. ZAMBIN remained an underperformer with RM selling interest driving the bonds down 50-75c on average. GHANA saw some buying cares in the short end, however long end continued to see better selling, long bonds down 50c on the day.