Trial now

Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor


Strong Bounce

BOND SUMMARY: EGB markets are showing little concern over what was once
considered a dangerous political outcome in Italy in the form of a 5-Star/Lega
government, with periphery spreads remaining well-behaved and Core rates off.
- Later today we get more colour on what the next Italian government might look
like, with 5-Star and Lega meeting with Pres Mattarella. 10Y BTP/Bund spread up
only 0.1bps to 131.32, but well off last week's high above 138.
- Bunds are sharply weaker, the Jun18 future last 49 ticks off at 158.36.
Long-dated Euribor futures are weakening, with Dec21s down 4 ticks to 99.12
(technical support next at 99.10), steepening the strip with whites barely off. 
- While the attention has been on Italy, Portuguese 10-year PGB/Bund spreads
have fallen to a six-session low at 111.39bps. Portugal now 20.1bps inside
Italy, taking aim at the 22.7bps level set in March.
- In a light data day, focus is on ECB speakers coming up, incl Praet,
Lautenschlaeger & Coeure. ECB`s Villeroy sounded modestly hawkish this morning.
- Little action in JGBs or USTs though both are weaker. Jun18 JGB futures off 3
ticks at 150.77; Jun18 US T-Notes likewise off 3 ticks at 119.09.