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Bunds break out of their overnight range on the open

BOND SUMMARY
  • We have already seen Bund futures break out of their overnight range as Europeans get to their desks with Bunds moving 15 ticks higher.
  • There is little on the data calendar today and focus will remain on Covid-19 headlines and the Brexit negotiations, with Barnier still in London for his extended stay.
  • In terms of supply Italy will come to the market to sell EUR2.0-2.5bln of the Sep-22 CTZ and EUR0.50-0.75bln of the 0.65% May-26 BPTei. The UK DMO will also come to the market to sell GBP3.25bln of the 0.125% Jan-24 gilt and GBP1.0bln of the 1.625% Oct-71 gilt.
  • Note that the calendar heats up later this week with the ECB on Thursday and GDP prints throughout the Eurozone on Friday.
  • Our technical analyst notes that gilts remain vulnerable here and a clear break of 135.06 would reinforce last week's bearish developments. Bunds remain between the bull trigger of the Oct 16 high at 176.29 and the trendline support drawn off the Sep 1 low at 174.78.

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