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Needle Still Points South


Yields Bounce as Equities Make New Monthly Highs


Heading North


Bull Rally Accelerates


Economists Survey Raises 2021 CPI Forecast To 4.9%

EGB SUMMARY: Bunds have started the week by giving back a portion of the large
gains of last week. Within the first hour of trading, the Sep-17 contract had
fallen below Friday's low of 164.19. The move is driven by a risk on sentiment
as the North Korean headlines have ebbed. 
- At around 09.20BST, news emerged that China had decided to ban import of coal
and other products from North Korea and so hopes of a diplomatic solution rose,
hurting Bunds in the process.
- Italian government debt is strongly bid a newspaper report picks up upon the
recent decline in Italian bank NPLs caused by rapid sales. The Bund-BTP spread
is 4bp tighter at 161bp but Spanish debt is moving more rapidly to 103bp. Spain
is being assisted by a very positive article about Spanish growth in the WSJ
alongside a decline in geo-political risks.
- Germany issued a new 6m bubill this morning and France does the usual bill
auctions this afternoon but there is no bond supply this week.
- Data has seen Eurozone IP data come close to consensus. Portuguese GDP missed
expectations and grew only 0.2% in Q2.