OFZ bonds opened on a softer footing, adjusting to Friday’s correction on the FX market. In the afternoon, risk appetite strengthened for a while, but failed to gain momentum, so the curve closed just marginally in the black, tightening a moderate 6bp yield-wise. The belly outperformed, with RFLB 21 7.60 (YTM 11.14%) advancing 0.4pp and RFLB 19 6.80 (YTM 11.17%) gained 0.25pp in price. At the same time, RFLB 19 6.70 (YTM 11.28%) lagged, slipping 0.2pp in price.
The long end traded feebly, with RFLB 28 (YTM 10.96%) closing flat at 75.00, while RFLB 23 (YTM 10.97%) corrected downward 0.1pp. The curve now looks relatively tight, with the long-dated bonds trading at an 11% yield level and the front-end pricing in a 250bp in rate cut.