Drift Away From Highs Extends Further

EGBs continue to move away from richest levels of the session, with Bund futures now flat on the day. Little to explain the move, although European equities extended a recovery from worst levels, while many point to a simple case of exhaustion after the early London bid.

• The German cash curve sees some modest twist steepening.
• Core/semi-core EGB spreads vs. Bunds sit within 1bp of yesterday’s closing levels, while BTPs are ~1.5bp wider on the day.
• 10-Year GGB/Bund spread little changed on the day ahead of DBRS Morningstar’s impending sovereign rating update on Greece, with relatively widespread expectations for the attainment of IG status apparent (see earlier bullet for further details).
• Elsewhere, Portugal have stepped into the post-summer break issuance window, announcing auctions of ’32 & ‘35 paper for next Wednesday.