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Dovish Centeno Unable To Help EGBs Off Lows

EGBS

Core/semi-core EGBs are weaker once again, with Bunds and OATs down around 60 ticks each at typing. Bunds are over 300 ticks lower than 138.84 high seen on Dec 27.

  • The latest comments from leaning ECB dove Centeno (r.e. not having to wait till May to make a decision on easing policy) provided a brief layer of support in Schatz futures. However, the move quick faded as Centeno had already expressed his views on rate cut timing with MNI before the Christmas break, stating that the discussion on when to ease policy may be held as early as January.
  • Otherwise, headline flow has generally been light, with today's heavy slate of sovereign/IG issuance weighing. Lower-than-expected unemployment figures out of the Eurozone and Italy will have provided an additional layer of downside momentum.
  • The German cash curve has bear steepened, with yields 3.5 - 6.0bps higher on the day. Periphery spreads to Bunds are a touch wider with the exception of Greece, with the GGB/Bund spread 0.4bps tighter at 113.8bps.
  • The remainder of today's local data docket is light, while comments from BdF's Villeroy are scheduled for 1730GMT/1830CET.

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