Benefitting From Positive Risk Environment

Core EGBs bull flatten as markets continue to benefit from an improvement in risk sentiment and a near 2% fall in Brent futures.

• Bund futures are up 0.28 today at 129.96 with generic 10y Bund yields down -4.9bp at 2.690% and the 2s10s curve -2.5bp flatter today at -30.9bp. OATS perform similarly with futures up 0.32 today at 124.50 and 10Y OAT yields down -5.5bp at 3.283%.
• Last night's dovish hike from the RBA may have provided a ceiling to yields in European trade, though sentiment appears to be the main driver of the moves this morning.
• German industrial production signalled continued weakness in the Eurozone's largest economy, while ECB-speak from de Guindos did not provide much new information. Eurozone September PPI printed in line at -12.4% Y/Y, which was not a surprise as most of the national-level data had already been available.
• Periphery spreads to Bunds trade tighter, with Spain underperforming. The 10-Yr BTP/Bund spread is currently 2.1bps tighter at 188.4bps while the Spain/Bund spread is 0.2bps tighter at 105.6bps. Spanish industrial production was better than expected this morning, but still provided a sixth consecutive negative Y/Y print.
• The remainder of the local docket is light today, with ECB's Nagel scheduled to speak after hours again at 1930 GMT.