Shift long Germany vs. UST exposure from outright to via options

The past week saw a further leg in the sell-off in DM yields which started in early July, with moves of up to +17bp led by the belly of the curve and the US underperforming cross-market. The sell-off reflected stronger-than-expected September PMI prints, especially in the Euro area and the US, as well as sensitivity to energy headlines, with noise around potential US diesel export restrictions adding another layer of uncertainty. Euro area spreads notably widened, particularly France-Germany and German swap spreads, likely reflecting further deleveraging of widely subscribed trades. On central banks, the Riksbank left the policy rate unchanged at 1.75% but tilted hawkish; the Norges Bank delivered a second 25bp hike to 4.5% with a dovish message;