Core/semi-core Stronger On Dovish ECB Sources; Peripheries Tighten

Core/semi-core EGBs remain firmer on the day, after an initial pullback from best levels lost momentum. Bunds are +14 ticks at 134.67, having been unable to breach the first resistance at 134.97 (20-day EMA) earlier.

• The morning's firmness came following a dovish ECB sources piece from RTRS, alongside follow-through from a soft Tokyo CPI in Japan and solid demand metrics at last night's 7Y auction in the US.
• Today's ECB-speakers have mostly derived from the hawkish camp of the Governing Council, though they have generally re-iterated the stance of data- (not date-) dependency, introduced in yesterday's press conference, as well as echoing Lagarde's lines on the labour market and wage data.
• A weaker-than-expected GfK consumer confidence print from Germany alongside moderating inflation expectations in the ECB's latest Survey of Professional Forecasters will have also marginally helped today's bid.
• The German and French cash curves have bull-steepened, with 5-year tenors outperforming. Meanwhile, periphery spreads have tightened owing to this morning's strength in European equities alongside the wider core FI bid. The 10-year BTP/Bund spread has compressed 2.5bps to 151.2 - close to the tightest levels in almost 2-years.
• The remainder of today's regional calendar is light, with markets looking to the US PCE deflator release at 1330GMT.