Bunds A Touch Firmer, Peripherals Tighten

Bund futures are +20 or so, above 130.50 and registering fresh session highs at typing. We haven’t seen much in the way of meaningful headline flow, leaving the space to trade in a two-way manner alongside wider core global FI markets.

• German yields are 1.0-2.0bp lower across the curve.
• Light hedging flows ahead of EU bond supply may have applied some modest pressure, but the move more than reversed ahead of auction results.
• Over the weekend, Bundesbank chief Nagel called on Germany to resolve the ongoing budget situation quickly, while sticking to his usual hawkish monetary policy tone, stressing that the ECB is "not yet where we want to be" on inflation.
• Elsewhere, Bank of Spain Governor de Cos noted on Friday that Eurozone bank lending has been "falling faster than we expected."
• Finally, Estonian CB chief Muller does not currently see the need for more rate hikes from the ECB.
• 10-Year peripherals are tighter to Bunds with the exception of Greece. The 10-year BTP/Bund spread is currently 2.3bps narrower at 172.7bps, still some 4bps wider than the multi-month tights seen last Monday, post-Moody's ratings update (Italy affirmed at Baa3, outlook upgraded to stable from negative).
• Today's European docket is highlighted by comments from ECB President Lagarde (1400GMT/1500CET), who speaks at the EU Parliament before the Committee on Economic and Monetary Affairs.