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EGBS: Bund Futures Inch Back Toward Session Highs, But Ranges Tight

EGBS
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Bund futures have inched back towards intraday highs following this morning’s run of flash PMI data and ECB-speakers, trading in a tight 30 tick range. 

  • Bunds are +5 ticks at 134.69, still 130 ticks below levels seen prior to last week’s ECB decision.
  • The Eurozone December flash PMIs were a little mixed, with the manufacturing components seeing renewed weakness but the services components rebounding above November’s levels and consensus estimates. Bund futures have largely shrugged off the increase in inflationary pressures noted in the German and EZ PMIs.
  • Meanwhile, ECB President Lagarde delivered a speech explaining the bank’s decision to drop its pledge to keep policy “sufficiently restrictive”. Passages around services inflation screened dovish.
  • Vice President de Guindos echoed Lagarde’s sentiment that the trajectory of the ECB’s rate path is clear, while Kazimir struck a somewhat more cautious tone.
  • The 10-year OAT/Bund spread is 1bp wider today at 79bps, off earlier highs of ~80.5bps, as markets digest Moody’s off-cycle ratings downgrade late Friday.
  • The remainder of today’s focus will be on new French PM Bayrou’s attempts to form a government, and the German no-confidence vote (results expected around 1500GMT/1600CET).
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Bund futures have inched back towards intraday highs following this morning’s run of flash PMI data and ECB-speakers, trading in a tight 30 tick range. 

  • Bunds are +5 ticks at 134.69, still 130 ticks below levels seen prior to last week’s ECB decision.
  • The Eurozone December flash PMIs were a little mixed, with the manufacturing components seeing renewed weakness but the services components rebounding above November’s levels and consensus estimates. Bund futures have largely shrugged off the increase in inflationary pressures noted in the German and EZ PMIs.
  • Meanwhile, ECB President Lagarde delivered a speech explaining the bank’s decision to drop its pledge to keep policy “sufficiently restrictive”. Passages around services inflation screened dovish.
  • Vice President de Guindos echoed Lagarde’s sentiment that the trajectory of the ECB’s rate path is clear, while Kazimir struck a somewhat more cautious tone.
  • The 10-year OAT/Bund spread is 1bp wider today at 79bps, off earlier highs of ~80.5bps, as markets digest Moody’s off-cycle ratings downgrade late Friday.
  • The remainder of today’s focus will be on new French PM Bayrou’s attempts to form a government, and the German no-confidence vote (results expected around 1500GMT/1600CET).