2-Way Flows Around UK Labour Market Data Before Overnight Gains Consolidated

Bund futures see two-way flows around the UK labour market data, which provided a downtick in payrolled employees for the month of June, while wages data was firmer than expected and was accompanied by positive revisions, which will provide a continued headache for the BoE. Elsewhere, final German CPI data was unchanged vs. the preliminary readings. Bund futures settle around pre-data levels, last +30 or so after leaning on the Asia-Pac bid in Tsys.

• Bund futures did manage a look above their Monday high, although technical conditions remain bearish. Our technical analyst highlights the Jun 16 low/Jul 6 high as the preliminary area of resistance (132.18/65), while initial support is seen at yesterday’s low (130.60).
• Yesterday evening’s ECB speak from Nagel & Herodotou did little to move the needle.
• ZEW data and further comments from ECB’s Villeroy provide the focal points of the regional calendar, while sovereign/SSA supply will come in the form of E5bln of the 2.40% Oct-28 Bobl, the Netherlands coming to market with E2.0-2.5bln of the 2.50% Jan-30 DSL and the syndicated tap of the EU’s 2.50% Oct-52 bond (we pencil in a transaction size of E5-6bln).