Bunds underperform USTs as they catch up with yesterday's post-UST auction moves

Core fixed income is under some pressure in early European trading with yields across the UST curve either exceeding or trading at similar levels to yesterday's highs while curves have steepened. There don't appear to be any new drivers to the move with most still citing continued weakness following yesterday's weak 5-year UST auction.

• The German curve seems to be catching up with some of yesterday's UST moves with Bunds underperforming 10-year USTs this morning (but still seeing a smaller move overall since the auction results).
• The main event for the day will be the ECB meeting with no material policy changes expected. Focus will now shift to the outlook for PEPP, reserve remuneration and the timing of the first rate cut. We expect the ECB will indicate that the first of these is being discussed, the second may be addressed at a later date, while the third is not even up discussion at this juncture. For the full MNI ECB Preview click here.
• TY1 futures are down -0-4 today at 105-17+ with 10y UST yields up 2.1bp at 4.978% and 2y yields up 0.1bp at 5.123%.
• Bund futures are down -0.39 today at 127.74 with 10y Bund yields up 2.9bp at 2.917% and Schatz yields up 0.7bp at 3.126%.