0738 GMT – With U.S. Treasury yields already moving lower, markets are likely to be more sensitive to a stronger-than-expected U.S. payrolls data than to a lower-than-expected reading, say analysts at UniCredit Research. “This is especially the case considering that markets are pricing in a very modest probability of another Fed hike, while around 80 basis points in rate cuts are priced in by the end of 2024,” they say in a note. Furthermore, the 10-year U.S. Treasury yield is trading almost 85 basis points through [below] the Fed funds, which incorporates already a decent amount of easing by the Federal Reserve, they say. The 10-year U.S. Treasury yield is trading at 4.669%, according to Tradeweb. ([email protected])

Fitch’s Italy Review Next Week Is a Test of Demand for BTP

0719 GMT – Fitch Ratings’ review of Italy on Nov. 10 will test appetite for Italian government bonds, or BTPs, after the recent spread narrowing, say rates strategists at Societe Generale in a note. “Country spreads have narrowed, but risks remain,” they say, pointing to Italy’s fiscal risks. BTP-Bund spreads narrowed across the curve as volatility in the rates markets fell and risk assets outperformed, the strategists say. The 10-year BTP-Bund yield spread is trading just below 184 basis points, after having recently reached 200bps, according to Tradeweb data. Fitch has ‘BBB’ rating and stable outlook on Italy. On Oct. 20, S&P Global Ratings affirmed Italy’s ‘BBB’ rating with a stable outlook. ([email protected])