Early Lows Untested In Bund & Gilt Futures, UK & EGB Curves Twist Flatten

Bund and Gilt futures failed to test/break session lows during the latest drift lower, even as U.S. TY futures broke their own prior London lows, before richening kicked back in. This came after the early London morning round of flow-driven moves (some attributed those gyrations to Europe reacting to the firmer than expected Australian labour market data and subsequent weakness in ACGBs). Both the UK & German cash curves have twist flattened, with similar moves seen across most of the European curves. Gilts generally outperform at the margin, aided by yesterday’s softer than expected UK CPI data, while EGB spreads vs. 10-Year Bunds operate within -/+1bp of yesterday’s closing levels.