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EGBS: Equity Weakness Sees OAT and BTP Spreads To Bunds Widen

EGBS

The reversal in European equities has weighed on semi-core/peripheral EGBs, with the 10-year OAT/Bund and BTP/Bund spreads seeing a bout of widening pressure.

  • French spreads now trade at the widest since early July (before the results of the 2nd round legislative election), currently +4bps at ~69bps.
  • Earlier this morning, Reuters reported that leftist France Unbowed (LFI) party was planning to take measures to scrap Macron’s pension reform. However, we note that this story was released 4 hours ago, so the timing does not match with the recent moves.
  • BTP spreads are also 4bps wider, retracing yesterday’s compression and now back above 131bps.
  • Bund, BTP and OAT futures have seen a decent bounce in volumes over the past ~30 minutes, with price action resembling a “flight-to-quality” dynamic.
  • Bund futures are just off intraday highs, currently +31 at 132.24, though first resistance still remains a little way off at 132.66 (Jul 17 high).
     
CEEMEAEurozoneBulletGlobalFixed Income BulletsRegion
CEEMEAEurozoneBulletGlobalFixed Income BulletsRegion

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