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Bounce of the lows post supply

  • EGB's led Bond lower this morning led by heavy supply out of Italy.
  • Bonds have since bounced off their lows since, with full reversal of this morning's price action with Supply out of the way.
  • Bund closed the overnight opening gap, but Futures trades in red territory.
  • Peripherals are all tighter against the German 10yr, with Italy in the lead by 1.7bps.
  • Gilt have underperformed following this morning's UK CPI beat.
  • Gilt printed a 118.54 low just ahead of support at 118.42 Low Apr 12.
  • Gilt/Bund spread has widened, and looked to have found a base circa 100.00/99.91bps for now, trades at 103.8, 2.8bps wider.
  • Looking ahead, sees US PPI as the notable release, and supply from the US with $20bn 30yr.
  • Gilt futures are down -0.47 today at 119.02 with 10y yields up 4.4bp at 1.846% and 2y yields up 3.1bp at 1.530%.
  • Bund futures are down -0.12 today at 155.24 with 10y Bund yields up 1.7bp at 0.805% and Schatz yields up 1.7bp at 0.086%.
  • BTP futures are up 0.16 today at 134.25 with 10y yields up 0.3bp at 2.409% and 2y yields up 1.1bp at 0.461%.

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