Big Reversal As July Comes To A Close

An active day on the European bond front to close out the month (indeed, potentially some rebalancing factors at play in sudden price movements that appeared to have little trigger).

We saw Bund selling in the last hour or so to session lows, with no clear trigger - particularly notable given that Eurostoxx are moving lower in tandem. Contacts reported potential bailing out of short-term longs.

The German curve has flipped from bull flattening at the open, to bear steepening over the course of the day.

Peripheries are also on the lows, with BTPs for instance giving up all the week's gains, and spreads widening despite Bund weakness.** Latest levels:

• Sep Bund futures (RX) down 36 ticks at 177.33 (L: 177.25 / H: 178.01)
• Sep BTP futures (IK) down 72 ticks at 146.66 (L: 146.66 / H: 147.67)
• Sep OAT futures (OA) down 55 ticks at 168.44 (L: 168.42 / H: 169.16)
• Italy / German 10-Yr spread 4.1bps wider at 155.3bps