10-Year Bunds Generally A Touch Wider On The Day, BTPs Outperform

Bund futures had a brief and limited showing above 133.00, and last sit ~20 ticks or so off best levels, just under a big figure better off on the session. Initial technical resistance beyond today’s high is seen at the Jul 5 high (133.68). 10-Year Bund yields have held the early move below 2.50%, with German cash benchmarks 6.5-8.0bp richer as the belly outperforms.

• Core/semi-core EGB curves sees similar moves on their respective curve, with a light tightening bias vs. Bunds evident.
• While the post-U.S. CPI bid in core global FI remains the dominant theme, we also note dovish musings from ECB Governing Council members Visco & Stournaras, which, along with the broader bid in core global FI, tick higher in equities and easing of ECB-terminal deposit rate pricing to just below 4.00% will have provided support to BTPs. Also note that firm pricing was seen at today’s BTP auctions, owing to prevailing market dynamics.
• Peripherals are generally tighter vs. Bunds at the 10-Year point, driven by the previously outlined inputs, with GGBs the exception and BTPs outperforming.