EGB/Gilt: Drifting higher after Powell, back to domestic next week

EGBs and gilts waited patiently for Fed's Powell to speak, moving little through the European morning and early US session before drifting higher.

• Bund futures hit their low of the day just ahead of Powell's speech (175.66 - the lowest in over a month) but at the time of writing had recovered to a high of 176.10 (close to yesterday's low of 176.14) and are now trading around 176.00.
• Gilt futures moved to a high of 129.74, above yesterday's high but a long way from Wednesday's high above 130.
• With equities generally moving higher post-Powell, Eurozone spreads have generally tightened on the day, led by 10-year BTP spreads coming in 2.2bp and Portuguese 10-year spreads 1.3bp. The exception in peripheral space was Greek spreads which have widened 0.5bp, continuing yesterday's widening.
• With Powell's speech out of the way, and with the caveat of geopolitical risk lingering with Afghan events, European markets can go back to focusing on more domestic events. Supply is due to pick up next week after the summer lull while the ECB meets the following week and markets are already looking ahead to 6-months time when PEPP is scheduled to end and what that means for the APP and markets more generally.
• Gilt futures are up 0.13 today at 128.66 with 10y yields down -2.3bp at 0.577% and 2y yields down -2.6bp at 0.113%.
• Bund futures are up 0.02 today at 175.95 with 10y Bund yields down -1.7bp at -0.425% and Schatz yields down -0.4bp at -0.748%.
• BTP futures are up 0.42 today at 154.18 with 10y yields down -3.8bp at 0.631% and 2y yields down -1.4bp at -0.501%.
• OAT futures are up 0.05 today at 161.60 with 10y yields down -1.7bp at -0.70% and 2y yields up 0.2bp at -0.719%.