Bunds Twist Steepen, Peripherals Widen

Bund futures last show -10 or so.

• German cash benchmarks are 0.5bp richer to 1bp cheaper, twist steepening.
• A negative lead from HK equities and a downtick in crude oil futures helped support Bund futures in Asia, before two-way trade ensued around the old Eurex open.
• Since then, global equity and crude oil benchmarks have recovered from session lows, helping reverse the early, modest richening in Bunds.
• The presence of the German Unity Day holiday will be thinning out liquidity, although German markets remain open, as indicated above.
• More widely, core/semi-core EGBs are little changed vs. Bunds in spread terms, while peripherals are biased wider.
• BTPs lead the widening in peripherals, giving back ~4bp of yesterday’s BTP Valore demand-inspired tightening as the Bund/BTP spread retakes the 190bp mark.
• We haven’t seen much headline flow there, although continued Italian fiscal worry remains evident.
• A raft of early morning ECB speak hasn’t really moved the needle, with familiar risks surrounding food and services inflation, as well as wage growth, touted (via chief economist Lane). This was accompanied by comments re: the need for rates to stay at restrictive levels for as long as is required.