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(Z1) Off Lows, But Remains Weak


Still Vulnerable


Bullish Price Sequence

EGB SUMMARY: EGBs are set to conclude a relatively quiet Friday slightly higher,
as trade wars and US nonfarm payrolls have been much ado about nothing.
- German Bund Sep8 futures are up 13 ticks at 162.82, 36 ticks up from the low.
The curve is modestly steeper, 2s10s up 0.2bps at 94.5bps.
- The Euribor futures strip is a touch steeper but little changed overall on
thin trading. Blue contracts up half a tick and Whites and Reds flat.
- Italian BTPs have pared gains following a Reuters report that the government
is set to increase the 2019 deficit/GDP target to 1.4% from 0.8% currently.
While the 10Yr yield has dropped 2.3bps on the day to 2.706%, the spread vs
Bunds is now just 1.3bps tighter, compared with 6.3bps of narrowing earlier.
- Spanish spreads are also slightly tighter, but Portuguese 10Yrs are 1.0bps
further outside Bunds to a six-session high of 151.2bps. Supply announcement
this afternoon possibly weighing, with up to E1bln total of Oct-28 and Apr-34
PGBs auctioned next week.
- Going into next week: Monday highlighted by ECB`s Draghi speaking at the
European Parliament. On Tuesday, France/Italy indu prod data and German ZEW.