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EGBS: Bunds Off Highs After Lagarde-induced Rally

EGBS
EurozoneBulletGlobalFixed Income BulletsRegionMarkets

Bund futures rallied following ECB President Lagarde’s seemingly dovish remarks (see earlier commentary for details), but have since moved away from intraday highs, now +5 ticks today at 134.86.

  • Friday’s high at 135.19 capped upside, and this level remains the first resistance before 135.49 (Sep 11 high).
  • German cash yields are now little changed. The curve had bear flattened after the state-level inflation data this morning, though this was more a function of dovish positioning heading into the releases, rather than the numbers themselves.
  • 10-year peripheral spreads to Bunds remain wider, as European equities unwind a little of last week’s strong rally.
  • Tomorrow’s regional data calendar includes the Eurozone-wide flash PMI estimate (MNI’s current tracking for headline is ~1.7% Y/Y) and the final September manufacturing PMIs.
  • ECB-speak from de Guindos, Nagel and Rehn will also be consequential, given the dovish shifts in broader ECB communique in recent days. 
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Bund futures rallied following ECB President Lagarde’s seemingly dovish remarks (see earlier commentary for details), but have since moved away from intraday highs, now +5 ticks today at 134.86.

  • Friday’s high at 135.19 capped upside, and this level remains the first resistance before 135.49 (Sep 11 high).
  • German cash yields are now little changed. The curve had bear flattened after the state-level inflation data this morning, though this was more a function of dovish positioning heading into the releases, rather than the numbers themselves.
  • 10-year peripheral spreads to Bunds remain wider, as European equities unwind a little of last week’s strong rally.
  • Tomorrow’s regional data calendar includes the Eurozone-wide flash PMI estimate (MNI’s current tracking for headline is ~1.7% Y/Y) and the final September manufacturing PMIs.
  • ECB-speak from de Guindos, Nagel and Rehn will also be consequential, given the dovish shifts in broader ECB communique in recent days.