Bunds moving through yesterday's lows while peripheral spreads tighten

Bund futures had been flat on the day but over the past half hour have started to tick lower with cash yields now 1.7bp higher as the curve has bear steepened. Peripheral spreads have tightened, led by BTPs with 10-year BTP-Bund spreads narrowing by 2.6bp on the day at writing.

• There is optimism a deal on the EU Covid Recovery Fund. The FT reported that the EU is looking to press ahead on a short-term solution without Hungary and Poland as both of these countries dig their heels in against including statements on common values in the EU budget.
• Elsewhere, Brexit negotiations are not looking too rosy according to the latest headlines but these have largely been ignored by EGB markets today.
• Bund futures are down -0.18 today at 174.38 with 10y Bund yields up 1.7bp at -0.513% and Schatz yields up 0.3bp at -0.721%.
• BTP futures are up 0.06 today at 150.66 with 10y yields down -1.0bp at 0.663% and 2y yields down -0.8bp at -0.385%.
• OAT futures are down -0.14 today at 169.05 with 10y yields up 1.5bp at -0.276% and 2y yields down -1.4bp at -0.684%.