Bunds Bull Steepen, Peripherals Widen A Touch

Cash Bunds run 5.5-8.5bp richer as the curve bull steepens, while Bund futures sit a little off of best levels, +90 or so on the day. The reaction to NRW regional CPI data out Germany and French CPI (both softer than expected) added to the bid tone observed in futures during Asia-Pac hours (which was aided by weaker than expected Chinese official PMI data).

• Peripheral EGBs are 0.5 to 1.5bp wider vs. Bunds at the 10-Year point, even as ECB terminal rate pricing eases a little in lieu of the already delivered CPI data mentioned above, with the locale of the softer than expected NRW CPI print generating a home bias when it comes to spread dynamics.
• Already delivered ECB speak from Villeroy & Muller has failed to add to their respective, previously outlined thought processes.
• Also note that above average month-end extensions for the broader EGB space should provide some underlying support during the session.