Curves Twist Flatten, Outright Bonds Stabilise Just Above Cheaps

EGBs stabilise off session cheaps alongside wider core global FI markets, with headline flow light and liquidity thinned out by the French observance of Bastille Day (which isn’t a market holiday, leaving OAT futures to run at 60% of the recent daily average volume at the time of typing).

• The only real regional headline flow of note has seen German Finance Minister Lindner underscore his view re: the need for further Ukrainian fiscal aid to be separated from EU budget matters.
• Bund futures last sit +10, as the futures curve twist flattens vs. settlement, while wider German cash trade sees 4.5bp of cheapening to 1.5bp of richening across the major benchmarks, with only 30s sitting firmer on the day.
• Similar moves have been seen across the core/semi-core EGB curves, with spreads little changed vs. 10-Year Bunds. Peripherals are little changed to a touch wider vs. Bunds on the day, with the general moves in EGB spreads contained.
• ECB-dated OIS has seen terminal deposit rate pricing reclaim 4.00% after yesterday’s look below.
• The regional docket is light for the remainder of the week.