Bunds Heavy All Day

Bunds have been weakening steadily since the open, with front futures off more than 100 ticks and sharp steepening in the curve (5s30s hit highest since early July).

This has happened despite early equity gains fading fast, with Eurostoxx moving to session lows over the course of the afternoon.

Periphery spreads have been relatively steady, but wider: Italy 10-Yr / Germany up over 2bps but range trading most of the afternoon.

No clear triggers for any of these moves; better-than-expected German data (IFO and Q2 final GDP) earlier seen contributing to risk-on atmosphere, but hard to explain Bund move with equities fading.

Wednesday thin on data, but sees supply from Italy, Portugal and Germany, while Finland's EUR3bln 10-Yr syndication (mandated today) may take place too. ** Latest levels:

• Sep Bund futures (RX) down 118 ticks at 175.84 (L: 175.75 / H: 176.95)
• Sep BTP futures (IK) down 120 ticks at 146.58 (L: 146.53 / H: 147.83)
• Sep OAT futures (OA) down 102 ticks at 167.74 (L: 167.66 / H: 168.72)
• Italy / German 10-Yr spread 2.7bps wider at 146.2bps