EGB SUMMARY: French Supply Well Digested, But Core/Semi Core Still Weaker

Supply has dominated EGBs this morning, with futures weighed by Spanish and French auctions.
•    Today’s MT OAT supply was the first French auction since President Macron called the snap legislative election on June 9. Overall, the results were digested smoothly by markets, with a modest tightening in the 10-year OAT/Bund spread following the results and little net movement in French swap spreads.
•    There was little net reaction in EGBs to the SNB decision, where rates were cut by 25bps against analyst expectations for a hold, although the CHF was sold.
•    Bunds are -33 ticks at 132.22, though our technical analyst notes that the latest pause in upside momentum appears to be a flag - a bullish continuation pattern.
•    German cash yields are 3-3.5bps higher across the curve, while the OAT curve has bear flattened as a result of today’s supply burdens.
•    10-year peripheral spreads to Bunds are biased tighter, with European equities rallying through this morning and the aforementioned French supply not seeing any unexpectedly weak results.
•    The BoE decision at 1200BST provides the next point of interest for markets, with little else of note on today’s regional calendar.