Cheaper To Start

German fixed income futures tick lower after the turn of the hour, chewing away their overnight gains to sit a little lower on the day, while the cash curve bear flattens. The tone of the weekend’s ECB speak has probably weighed on the space, while some optimism re: the U.S. debt ceiling situation may be creeping back in.

• The weekend saw ECB President Lagarde stress that the Bank has more ground to cover, reaffirming her previous line of messaging, even with a large part of the tightening journey now in the rear-view. She also underlined the ECB’s data-dependent stance, while noting that the Bank is not pausing based on the information that it has to hand at present.
• Elsewhere, late on Friday we saw ECB Executive Board Member Schnabel note that the Bank can keep acting to return inflation to target, underscoring the need to get rates to a sufficiently restrictive level, with further ground to cover on rates and a need to hold them at a sufficiently restrictive level for some time when the hiking cycle is over.
• Monday’s ECB speak will bring comments from de Guindos, Lane, Villeroy, de Cos, Holzmann & Vujcic. Regional supply will come from the EU, with 5- & 11-Year paper set to be auctioned this morning (up to EUR2.5bn of each will be on offer).