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BONDS: Peripheral Europe Outperforms

BONDS
BulletMarketsFixed Income Bullets

EGB spreads to Bunds flat to 2bp tighter, with core global FI under initially pressure this morning, while OATs and the periphery outperform.

  • Hard to really identify a meaningful driver when it comes to the downtick in core bonds, with gilts just playing catch up to Bunds at the London open, leaving the 10-Year UK/German spread little changed.
  • An uptick in oil presents the most obvious ‘explainer’, while some desks flag the usual pre-risk event tidying of positions, with NFPs due later today.
  • Note that the move has already started to fade.
  • Similarly, it’s hard to really identify a key driver of the EGB spread tightening vs. Bunds, particularly with little movement in EUR swaption vol. European equity benchmarks have recovered from lows, but the move came before then.
  • BTP-positive fiscal headlines from Italian Finance Minister Giorgetti were seen yesterday, although they came well before the close so shouldn’t be having too much impact today. BTP/Bunds Trades around 131.5bp, comfortably within its recent range, with recent moves below 130bp failing to stick.
  • OAT/Bunds into 78bp. Participants still await details of France’s medium-term fiscal plans, with the upcoming run of sovereign credit rating reviews (starting next week) providing further headline risk for French paper.
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EGB spreads to Bunds flat to 2bp tighter, with core global FI under initially pressure this morning, while OATs and the periphery outperform.

  • Hard to really identify a meaningful driver when it comes to the downtick in core bonds, with gilts just playing catch up to Bunds at the London open, leaving the 10-Year UK/German spread little changed.
  • An uptick in oil presents the most obvious ‘explainer’, while some desks flag the usual pre-risk event tidying of positions, with NFPs due later today.
  • Note that the move has already started to fade.
  • Similarly, it’s hard to really identify a key driver of the EGB spread tightening vs. Bunds, particularly with little movement in EUR swaption vol. European equity benchmarks have recovered from lows, but the move came before then.
  • BTP-positive fiscal headlines from Italian Finance Minister Giorgetti were seen yesterday, although they came well before the close so shouldn’t be having too much impact today. BTP/Bunds Trades around 131.5bp, comfortably within its recent range, with recent moves below 130bp failing to stick.
  • OAT/Bunds into 78bp. Participants still await details of France’s medium-term fiscal plans, with the upcoming run of sovereign credit rating reviews (starting next week) providing further headline risk for French paper.