Bunds break through major support level

Core fixed income has been under pressure once again this morning while peripheral spreads have widened.

• Despite the move on the day in Bunds being a little smaller than the moves in Treasuries and gilts, it is Bunds that have broken through key technical levels. Our technical analyst noted 168.59 as the key support level (the May 13 low) and we have broken through this level already today. This opens up a move towards 168.09.
• The focus later today will be on the FOMC Minutes. Although a number of analysts are expecting the details to be dated given the data and market moves seen since, the market will be looking for any hints of the magnitude of economic growth or inflation needed for tapering to be on the table.
• In addition to the Minutes, there will be speeches from the ECB's de Cos and Lane, Fed's Bullard, Quarles and Bostic.
• There will also be focus on today's 20-year Treasury auction. In Europe, Finland holds a syndication while the UK, Germany and the EFSF are all holding auctions.
• TY1 futures are down -0-5+ today at 132-07 with 10y UST yields up 2.3bp at 1.662% and 2y yields up 0.1bp at 0.152%.
• Bund futures are down -0.32 today at 168.50 with 10y Bund yields up 1.6bp at -0.88% and Schatz yields up 0.1bp at -0.652%.
• Gilt futures are down -0.27 today at 127.22 with 10y yields up 2.3bp at 0.890% and 2y yields up 0.5bp at 0.088%.