Day ahead

It has been a strong start to the morning session for Bunds which have followed Treasuries higher after trading in a fairly tight range overnight as risk-off sentiment sweeps through the market once again.

• Bund futures have now surpassed yesterday's high of 177.08 and our technical analyst sees the next resistance at the August 5 high. This is also the bull trigger an a clearance of this level would confirm a resumption of the uptrend from a technical perspective.
• The moves in Bunds are actually fairly small given that all major European equity index futures are down more than 1% on the day.
• Peripheral spreads have opened wider on the day, too, with BTP futures largely unchanged on yesterday's close.
• Looking ahead, the only data we have today is Eurozone current account data while France will tap E6-7bln of MT OATs and E0.5-1.0bln of linkers and Ireland will sell bills.
• TY1 futures are up 0-7+ today at 134-12 with 10y UST yields down -2.0bp at 1.240% and 2y yields down -0.9bp at 0.207%.
• Bund futures are up 0.15 today at 177.07 with 10y Bund yields down -0.7bp at -0.490% and Schatz yields down -0.3bp at -0.751%.
• Gilt futures are unch today at 129.82 with 10y yields down -0.1bp at 0.564% and 2y yields unch at 0.135%.