EGBS: Bunds At Session Lows, But First Support Untouched

Bund futures trade near session lows alongside wider core FI, currently -50 ticks at 134.29, as stronger-than-expected August flash PMIs in the Eurozone and the US weighed.

• The technical trend condition in Bunds remains bullish though, with the today’s sell-off leaving first support at 134.09 (Tuesday’s low and the 20-day EMA) untouched.
• EUR STIRs have softened alongside Bunds, with Euribor futures -0.5 to -5.0 ticks lower through the blues, and ECB-dated OIS now pricing 66bps of easing through the remainder of this year (vs 68bps this morning).
• The ECB’s July meeting accounts noted that “The September meeting was widely seen as a good time to re-evaluate the level of monetary policy restriction”, in fitting with OIS fully pricing a 25bp cut through that gathering.
• Earlier today, ECB Q2 negotiated wages fell notably to 3.55% (vs 4.74% prior, and at the bottom end of the 3.5-4.5% forecast range MNI had seen coming into the release) but did not provide a sufficiently dovish impulse to have much market reaction.
• Tomorrow’s regional calendar includes sentiment data from France, alongside ECB inflation expectations. Though focus will be on Central Bank-speak from Jackson Hole, namely Fed Chair Powell and BoE Governor Bailey.