Curves Steeper, BTPS Widen

Slightly stronger than expected CPI data out of the UK and ongoing EGB supply provide sources of pressure during the early rounds of Wednesday trade.

• That leaves various 10-Year EGB metrics near key resistance levels in yield terms, although Bunds remain away from cycle extremes.
• Bund futures last show -35. Initial technical support (127.46) is some ~25 ticks below session lows and 30 ticks below prevailing levels.
• German cash benchmarks are 0.5-4.5bp higher, bear steepening.
• Spreads to Bunds are generally little changed to wider, with BTPs coming under the most pressure given their beta to the outright sell off, well-documented Italian fiscal worry and proximity to sovereign credit rating announcements for Italy.
• ECB speak didn’t move the needle, with Holzmann and Stournaras sticking to their respective norms. The latter underscored PEPP’s status as the first line of defence for bonds.