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Commerzbank on Overnight News

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Commerzbank in its "European Sunrise" note of Wednesday highlighted:

Markets: United States Treasuries gained into the New York close, remained supported in Asia. Strong 40-year Japanese government bond auction amid steeper curve. Asian stocks pare opening gains, e-minis gain, led by tech. Brent fell below US$98/barrel.

Fed: Former New York Federal Reserve President Bill Dudley says credibility is at risk after more than five years of inflation above target. Minneapolis Fed President Neel Kashkari says the Fed could embark on a series of hikes in response to inflation.

Iran war: Iran says it will sign a peace deal with the U.S. only if US$24 billion in frozen assets are released.

==EUROPE:

EU: The European Union urges countries to make decision on new own resources for the next long-term budget.

U.K.: The United Kingdom could join a four billion euros EU equity investment fund for startups. France signals volte-face on "Made in Europe" subsidies for U.K. car industry (FT)

==ASIA.

Japan: Central Bank (BoJ) Governor Kazuo Ueda warns that rising oil prices are a test for the entire inflation regime.

New Zealand: The central bank (RBNZ) left rates unchanged as expected but signaled the need for a near-term hike.

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SocGen's Overnight Economic News Summary

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Market Chatter: Demand for Japan's 40-Year Government Bonds Rises on Increased Yields

Japan's 40-year government bonds attracted greater demand compared to its 12-month average as investors flocked to higher yields, Bloomberg News reported Wednesday.Wednesday's sale saw the bid-to-cover ratio reaching 2.70, greater than the 2.54 at the last auction and the 2.47 average for the last 12 months, the report said.Bond yields hit 3.84% against 3.6% in the previous sale and the highest yield estimate of 3.85% in a Bloomberg survey, according to the report.The results point to a "solid 40-year auction" but are "by no means optimistic," amid a decline in bid amount by more than 200 billion yen against a 100 billion yen drop in the issuance amount, the report cited BNP Paribas Asset Management senior bond strategist Ryutaro Kimura as saying.The results came despite higher oil prices due to further developments in the Middle East war, while moves for a supplementary budget without a rise in bond issuance have narrowed bond supply worries, according to the report.The 40-year yield reached a peak of 4.355% earlier in May before dropping to about 4.095%, the report said.(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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