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(Z1) Off Lows, But Remains Weak


Still Vulnerable


Bullish Price Sequence

EGB SUMMARY: Core EGBs look to finish Thursday stronger following earlier
losses, following a largely uneventful ECB GC decision and press conference.
- ECB President Draghi provided clarification that English is the official
version of ECB communications and that ambiguous foreign language translations
of rates remaining on hold until `at least through summer 2019` should be
interpreted in that light. He also reiterated that the capital key is the anchor
for APP reinvestments, which could be interpreted as Bund-positive.
- Bunds rallied throughout the Q&A, with the Sep8 future rising from 162.03
pre-decision, to as high as 162.37; last trading 162.31, down 6 ticks.
- Periphery yields had relatively little reaction, though spreads widened as
Bunds edged higher. 10-Yr BTP yields at 2.691% are down 2.7bps from the high but
up 1.3bps on the day. Spread over Bunds 1.7bps wider at 229.9bps.
- Euribor strip has bear steepened; short-end flat while Blues up 2.0-2.5 ticks.
- Very modest decline in ECB hike expectations according to MNI PINCH; Oct-19
still the first month in which 10bps of hikes are priced in.
- With EGB supply and ECB out of the way this week, US & French GDP eyed Friday.