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Bunds Pare Pill-Inspired Gains

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Core/semi-core EGBs have pared early gains, with Bunds now flat on the day at 130.90, from an intraday high of 131.13.

  • While there was limited reaction to this morning’s UK labour market data, EGBs followed Gilts higher after BoE chief economist Pill suggested rate cuts may be considered in the summer.
  • However, the move has since faded, with today’s heavy sovereign supply calendar (Schatz auction, EU and Italian syndications) and a stronger-than-expected German ZEW survey likely weighing on the space.
  • The technical backdrop in Bund remains bearish as a result, with bulls needing to clear the 50-day EMA at 131.85 to signal a reversal.
  • The German and French cash curves have lightly twist steepened, pivoting at 10-year tenors, while 10-year periphery spreads to Bunds are generally little changed.
  • Today’s regional calendar sees appearances from ECB’s Schnabel (1345BST) and Knot (1500BST). Knot will appear alongside Fed Chair Powell at an event organised by the Netherlands' Foreign Bankers' Association.
  • US PPI will also be eyed later.
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Core/semi-core EGBs have pared early gains, with Bunds now flat on the day at 130.90, from an intraday high of 131.13.

  • While there was limited reaction to this morning’s UK labour market data, EGBs followed Gilts higher after BoE chief economist Pill suggested rate cuts may be considered in the summer.
  • However, the move has since faded, with today’s heavy sovereign supply calendar (Schatz auction, EU and Italian syndications) and a stronger-than-expected German ZEW survey likely weighing on the space.
  • The technical backdrop in Bund remains bearish as a result, with bulls needing to clear the 50-day EMA at 131.85 to signal a reversal.
  • The German and French cash curves have lightly twist steepened, pivoting at 10-year tenors, while 10-year periphery spreads to Bunds are generally little changed.
  • Today’s regional calendar sees appearances from ECB’s Schnabel (1345BST) and Knot (1500BST). Knot will appear alongside Fed Chair Powell at an event organised by the Netherlands' Foreign Bankers' Association.
  • US PPI will also be eyed later.