Bunds Outperform, BTPs Widen Again

Bund futures hold higher after the weekend events in Israel and softer than expected German industrial production data (although it was accompanied by positive revisions) provided support during the early rounds of Monday dealing.

• Bund futures last show +60, while the major German cash benchmarks are 3.0-4.5bp richer, with 10s outperforming at the margin.
• The bulk of the EGB curves see similar moves, albeit to a lesser magnitude, as the flight to quality surrounding maters in Israel promotes German outperformance. Spreads to Bunds are biased wider as a result.
• BTP widening remains a theme, with the 10-Year BTP/Bund spread pushing further above the 200bp mark after tagging the highest level seen since January last week. The spread is the best part of 5bp wider on the session.
• A quick reminder that the weekend saw outgoing BoI governor Visco urge Italian PM Meloni’s government to “soothe investors’ fears about the country’s debts by reducing its fiscal deficit and tackling reforms needed to boost growth.”
• Weekend comments from ECB President Lagarde, as well as early Monday communique from ECB’s de Guindos & Kazaks, failed to move the needle.
• Incoming ECB Executive Board member Cipollone will appear in front of the EU Parliament this afternoon. Comments from ECB’s de Cos are also due.