Core Paper Off Best Levels, European Peripherals Get Most Of The Attention

Core bonds are happy to consolidate off best levels of the day, with European & U.S. equity index futures off their lows and U.S. regional lender PacWest showing higher pre-market after it announced the sale of a portfolio of real estate loans (albeit at a discount).

• That leaves U.S. Tsys bull steepening on the day, while Bunds & Gilts twist flatten.
• Greek paper remains the notable mover in the EGB space in the wake of the previously covered national election results, with the 10-Year Greek/German spread narrowing by the best part of 20bp (based of BBG generic yields), flirting with the 140bp mark as of typing. A quick reminder that the incumbent Greek ruling party outperformed pre-election polls. PM Mitsotakis has noted that he will not be looking to form a coalition as he looks to build on momentum via a second-round vote which could generate a mandate for his party to govern alone.
• Portuguese paper manages to benefit from the ratings outlook upgrade Portugal received from Moody’s on Friday.
• Meanwhile, the rally in Portuguese and Greek bonds is seemingly limiting any widening impetus in Spanish & Italian paper.