Comments from Italian Debt Director Drive the Euro

Early bull flattening seen in core fixed income markets has reversed in Treasuries and Bunds and to a lesser extent in gilts.

• Director General at the MEF Iacovoni said in a Bloomberg interview that it is currently 15-20bp cheaper to fund in dollars than euros in a move that has helped EURUSD move to its highs of the day (effectively pointing out how undervalued the euro is versus the dollar on this basis).
• There have been some interesting comments from speakers this morning. ECB Executive Board member Schnabel said earlier today that the ECB is facing a more difficult situation in March and that the ECB would need to "discuss the intensity of asset purchases". Muller, Governor of the Estonian Central Bank said that the second wave of the virus was probably stronger than expected while Spain's de Cos has said that it is important to maintain flexibility in the purchase programmes.
• There are a number of other BOE and ECB speakers scheduled today as well as Bullard. Focus will remain on these and ongoing Brexit negotiations.
• TY1 futures are down -0-0+ today at 138-03+ with 10y UST yields up 0.9bp at 0.891% and 2y yields down -0.2bp at 0.176%.
• Bund futures are up 0.09 today at 174.83 with 10y Bund yields down -0.3bp at -0.540% and Schatz yields down -0.1bp at -0.730%.
• Gilt futures are up 0.17 today at 134.71 with 10y yields down -0.5bp at 0.342% and 2y yields up 1.1bp at -0.32%.