A Little Weaker, Headline Flow Muted

Core and semi-core EGBs have moved back toward intraday lows.

• Headline flow has been muted, while today’s macroeconomic data (German and Spanish IP, Italian retail sales) were not market movers.
• Bunds are -30 ticks at 131.53. Bulls need to overcome firm resistance at the 50-day EMA (131.87) to turn the technical tide a little more in their favour.
• German and French cash yields are 1.5-3.0bps higher today, with 10s leading the weakness on both curves.
• 10-year peripheral spreads to Bunds are little changed to a touch wider, even as European equity futures push through April’s highs.
• The presence of today’s 10/15-year supply from Portugal may have weighed on peripherals at the margin, but ultimately passed smoothly.
• Meanwhile some desks point to the degree of recent tightening in the likes of BTPs as a headwind, although the focus on the fairly imminent (expected) ECB easing provides fundamental background support for tightener positions.
• Today’s scheduled ECB speakers include the hawkish-leaning Wunsch and the usually dovish de Cos, the latter of whom we heard from yesterday (with little deviation from the status quo, pointing to a rate cut in June, while providing little colour beyond that meeting).