China Worries Offset Slightly Firmer Than Exp. UK CPI

Bund futures initially trade lower on the slightly firmer than exp. UK CPI print before reversing to pre data levels.

• Contract last +5.
• China worries surrounding the property and shadow bank sector provided background support overnight, as equities struggled in Asia.
• Germany will return to the market today with a 30-year Bund auction. E1.0bln of the 0% Aug-50 Bund (ISIN: DE0001102481) will be on offer alongside E1.5bln of the 0% Aug-52 Bund (ISIN: DE0001102572).
• Monthly industrial production, initial Q2 GDP and revisions to the Q2 employment data at the Eurozone level will cross this morning.
• Technically, Bund futures maintain a bearish tone and the contract traded sharply lower yesterday, before finding some support. 131.12, the Aug 4 low and 130.60, the Jul 10 low, have been cleared. This strengthens the current bearish theme and marks a resumption of the long-term downtrend. Attention turns to the Psychological 130.00 handle next. A break would open 129.69, a Fibonacci projection. Initial resistance is seen at 131.26.