Bunds Around Session Bests, Wider Impulses Still Eyed

Bund futures are more willing to cling around recent session highs than their gilt counterpart, although UK paper continues to comfortably outperform on the day post-UK inflation data.

• Bund futures +20, after bouncing from technical support on the UK CPI data, German cash benchmarks 1-3bp richer, bull steepening a little.
• Regional European headline flow has remained somewhat limited thus far, with UK CPI providing the focal point of note for wider markets as participants look ahead to the impending FOMC decision.
• A pullback from ‘23 highs in crude oil futures has probably helped underpin outrights.
• Peripherals are now more mixed on the day in spread terms, with GGBs comfortably off tights that came around a smoothly digested auction, while the remainder of the space is mixed vs. Bunds.
• Feedthrough from BoE-dated OIS has applied some modest pressured to ECB-dated equivalents, with terminal deposit rate pricing showing around 4.07% and the strip running flatter on the day.