Bull flattening dominates price action

A busier afternoon session for EGBs, with broad base short covering and position adjustment ahead of the ECB tomorrow.

• Few clearer expects a Dovish ECB, and for Lagarde to reject the idea of Tapering.
• BTPs are once again outperforming, pushing the spread tighter by 1.8bps.
• German 5/30s now flattest since in the 7th of May, as Treasuries continue to rally.
• German 5/30s support comes at the low on that date at 91.014, now at 91.573
• Nothing is left on the calendar with all attention on tomorrow's ECB and US CPI
• Sep Bund futures (RX) up 56 ticks at 172.66 (L: 172.08 / H: 172.85)
• Germany: The 2-Yr yield is down 0.7bps at -0.676%, 5-Yr is down 2.2bps at -0.622%, 10-Yr is down 3.1bps at -0.255%, and 30-Yr is down 3.1bps at 0.296%.
• Sep BTP futures (IK) up 80 ticks at 151.56 (L: 150.84 / H: 151.71)
• Sep OAT futures (OA) up 54 ticks at 159.23 (L: 158.69 / H: 159.37)
• Italian BTP spread down 2.1bps at 106.4bps
• Spanish bond spread down 1.4bps at 64.1bps
• Portuguese PGB spread down 1.3bps at 64.1bps
• Greek bond spread down 0.6bps at 108.2bps