Constructive Start With Debt Limit Talks And Cenbank Speakers In Focus

Global core FI has had a constructive start to a week that begins quietly in terms of data (nothing of note in either the European or US calendars), with US debt limit intrigue and central bank speakers the primary focus Monday.

• UK and German curves are trading mildly bull flatter (yields down 1-2bp), with the US outperforming in a bull steepening move (2-5Y yields down 3+bp, 10-30Y down 1-2bp). Terminal central bank pricing is a little softer (ECB/BoE down 2 to 2.5bp, Fed off 1.1bp).
• Periphery spreads are tighter. Greek bonds are easily outperforming following a market-favorable outcome in Sunday's legislative elections (GGBs/Bunds 13bp narrower).
• The session's focus will be the debt limit talks between Pres Biden and House Speaker McCarthy which are set for this afternoon ET, no time specified as yet.
• Over the weekend, Tsy Sec Yellen warned that the odds of getting to June 15 without running out of cash were "quite low"; staff-level talks resumed Sunday.
• With no key data to be released, central bank speakers highlight the docket, including ECB's Lane, Villeroy, and Holzmann.
• For the FOMC, Bullard, Bostic, Barkin, and Daly are ahead - Kashkari over the weekend floated the idea of a "skip" of hiking at a meeting "to get more information", but not "any kind of declaration that we're done".

Latest levels:

• Jun US 10Y futures (TY) up 9.5/32 at 113-27.5 (L: 113-20 / H: 113-30)
• Jun Bund futures (RX) up 31 ticks at 134.55 (L: 134.12 / H: 134.68)
• Jun Gilt futures (G) up 47 ticks at 98.83 (L: 98.45 / H: 98.98)
• Italy / German 10-Yr spread 2.3bps tighter at 182.1bps