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EGBS: Bunds and OATs Drift Lower Ahead Of Powell Testimony

EGBS

Bund and OAT futures have steadily drifted lower through the morning. With few meaningful macro catalysts to note, this likely represents a degree of profit-taking following yesterday’s rally and ahead of this week’s risk events (i.e. Fed Char Powell’s testimony today and US CPI on Thursday).

  • Bund futures are -26 at 131.02, back within yesterday’s range.  Yesterday’s rally came as markets continued to digest mixed results from the second round of French elections.
  • ECB’s Panetta provided an unsurprisingly dovish tone, while today’s green DSL supply may have weighed in the run-up to the 0900BST bidding deadline.
  • Books for today’s dual-tranche EU-bond syndication currently exceed E110bln across the two bonds on offer.
  • The German and French cash curves have lightly bear steepened, while 10-year peripheral spreads to Bunds are mixed.
  • Fed Chair Powell is scheduled to testify at 1500BST today, with some precedent of text being released at the same time but always a chance it comes earlier.

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