Bunds Extend On Yesterday’s Recovery

Bunds trade on the front foot through the old Eurex open, as yesterday’s recovery from lows extends further.

• That leaves the contract +35, building on overnight gains.
• Technically, the medium-term trend direction continues to point down. An extension lower would open 126.62, the Oct 4 low and bear trigger. Conversely, bulls need to clear short-term resistance/the bull trigger at 130.20 to start turning price action more in their favour. That resistance point is the best part of 170 ticks away from prevailing levels.
• Peripheral spread dynamics will be eyed ahead of Thursday’s ECB monetary policy decision, although the move away from outright cheaps in core global FI and insulation via Friday’s S&P updates on both Greece & Italy is providing some support there. A quick reminder that existing Bank communication and sources pieces have played down the need for TPI intervention at current BTP spread levels.
• Flash PMIs from across the globe present the macro highlight on Tuesday.
• The latest ECB bank lending survey will also cross today.