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Bunds Boosted By Weak Eurozone PMIs

EGB SUMMARY

Bunds continued to climb Friday, with the latest catalyst being weak August flash PMIs for France and the Eurozone (Germany came in closer to expectations) which cast doubt on the Eurozone economic recovery.

While we are off best levels, Sep Bunds are in line for their strongest close since Aug 10. That said, flattening in the German curve has given way to modest steepening.

Meanwhile, 10-Yr BTP yields hit the widest levels since Aug 7 (146.9bps high).

Next week we get a pretty thin calendar of events (appearances by ECB's Schnabel and Lane), while MNI estimates EGB issuance at EUR17.8bln (incl Germany, Italy, Belgium, and Portugal). German IFO and French prelim Aug CPI are among the few data highlights.** Latest levels:

  • Sep Bund futures (RX) up 12 ticks at 177.07 (L: 176.75 / H: 177.37)
  • Sep BTP futures (IK) down 38 ticks at 147.69 (L: 147.58 / H: 148.16)
  • Sep OAT futures (OA) down 7 ticks at 168.75 (L: 168.66 / H: 168.97)
  • Italy / German 10-Yr spread 4.2bps wider at 145.2bps

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