EGB/Gilt - US ISM provides some volume and volatility

EGBs extended their gains throughout the afternoon, as more short covered.

• Volumes and volatility picked up, with Bund trading through the initial yield support at -0.5%.
• The German 10yr yield tested lowest level since the 1st Feb, and the 2s/10s at flattest since the 2nd Feb.
• Price action quickly reversed though, as US ISM release saw a big beat, pushing Bund well off its best levels and back towards the session low.
• Peripheral are all wider on the margin, Italy leads by 1.2bp.
• Gilts have traded in tandem with EGBs,.
• Gilt/Bund spread is just 0.4bp wider, while the UK curve unwinds some of the flattening, post US ISM.
• We have nothing left on the calendar, attention now turns to the BoE tomorrow, but more importantly on the US NFP Friday.
• Gilt futures are down -0.15 today at 130.16 with 10y yields up 1.0bp at 0.529% and 2y yields up 2.2bp at 0.072%
• Bund futures are down -0.05 today at 176.92 with 10y Bund yields unch at -0.483% and Schatz yields up 0.1bp at -0.775%
• BTP futures are down -0.11 today at 154.86 with 10y yields up 0.8bp at 0.573% and 2y yields down -0.1bp at -0.493%.
• OAT futures are down -0.04 today at 162.43 with 10y yields unch at -0.135% and 2y yields down -0.2bp at -0.713%.