The belly of the curve is performing quite well in this risk off move this morning. The Curve has steepened from levels which prevailed when I first marked the curve at about 530AM New York time. So 5s 10s has moved from 115.2 to 115.8 and 5s 30s has steepened from 209.8 to 210.4. The 10s 30s spread is unchanged at 94.9.
In the early going the flight to quality risk off trade is dominating. The Hungary Forint (which I had never written about until yesterday) is cratering again as we speak. It has exploded from 228 to 232 over the last several hours. There is also an undercurrent of concern regarding deflation as the inflation data in Europe signal loss of pricing power.
Dealers tell me that there have been extension trades out of 5s into 10s and real money receivers in belly of curve.