Drivers Of The Early London Bid

In sum, we flag the following drivers for the early London bids in core global FI markets.

• UK retail sales data coming in softer than expected, with little in the way of meaningful macro news flow crossing in the time since.
• A dovish shift in BoE-dated and ECB-dated OIS aided by the above.
• Block buying in Schatz and Bobl futures then helped the move develop further.
• Meanwhile, various breaks of technical resistance levels across U.S., German & UK FI futures, along with corresponding breaks in various key yield supports, added a technical aspect to the move (we have covered the exacts of those technical breaks in various other bullets).
• BTPs have compressed on the move. A quick reminder that Moody’s (current rating: Baa3; Outlook Negative) are scheduled to update on Italy’s sovereign credit rating after hours. We suggest that continued speculation surrounding no change in rating/an outlook tweak to stable will also be factoring in here, with expectations re: any outside chance of a move to sub-IG status evaporating in recent times.