Bunds rally, spreads widen. Causes unclear

Core bonds have been moving higher globally, but it is unclear why. Oil has sold off, the dollar has strengthened and against this backdrop Bunds are outperforming Treasuries and to a lesser extent gilts. However, we have seen equities move higher while peripheral spreads across the Eurozone widen.

• The biggest talking point remains Italy with Renzi due to give a press conference at 16:30GMT followed by PM Conte and the government holding a press conference at 19:30GMT. It appears Renzi has risked that his ministers could resign from the government but as our political risk team points out, this doesn't necessarily mean that they will vote against the government if there was a confidence vote.
• Bund futures are up 0.73 today at 177.17 with 10y Bund yields down -4.5bp at -0.514% and Schatz yields down -1.1bp at -0.706%.
• BTP futures are up 0.49 today at 151.04 with 10y yields down -1.8bp at 0.630% and 2y yields up 0.1bp at -0.333%.
• OAT futures are up 0.63 today at 167.29 with 10y yields down -4.1bp at -0.298% and 2y yields down -0.4bp at -0.630%.