Curves A Little Flatter As ECB Pricing Ticks Higher

The combination of the light uptick in crude oil futures, late Friday ECB speak and firmer regional equity benchmarks has applied modest pressure to EGBs this morning, with participants selling into any rallies.

• Chinese equity gyrations, outlined elsewhere, have generated the bulk of the macro interest thus far. Sharp opening gains derived from policymaker support were swiftly sold into at the index level, although the CSI 300 was still ~1.2% firmer on the day.
• Softer than expected Eurozone money supply data did little for EGBS.
• EGB futures leak to session lows at typing, with both Bund and BTP futures operating just above Friday’s lows.
• The majority of EGB curves bear flatten at the margin, with a light uptick in ECB-dated OIS helping that dynamic.
• Spreads vs. 10-Year Bunds are little changed to a touch tighter on the day, with light outperformance for peripherals noted as CDS indices tighten and regional equities firm (outweighing the light firming in ECB-dated OIS pricing).
• Comments from ECB’s Nagel & Holzmann headline the regional docket during the remainder of the day.
• Participants await impending supply from the EU.
• Liquidity is thinned by a national holiday in the UK.