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EGBs-GILTS: Bunds Testing Recent Highs

BOND SUMMARY

A defensive start to the week in European FI, with periphery spreads wider and Gilts and Bunds stronger with bull flattening in the curve.

  • Bund futures nearing the recent (Jul 20) high of 176.28. Some resistance between there and 176.38, before next major resistance at 176.64.
  • Equity weakness triggered by a poor session by Chinese and Hong Kong stocks with increased regulatory scrutiny eyed.
  • German IFO at 0900BST is the day's data focus.
  • The only scheduled central bank speaker is BOE's Vlieghe at 1200BST.
  • Belgian OLO auction (up to E3.1bln on offer) at 1100BST is today's bond supply.

Latest levels:

  • Sep Bund futures (RX) up 41 ticks at 176.22 (L: 175.96 / H: 176.26)
  • Sep Gilt futures (G) up 42 ticks at 129.93 (L: 129.8 / H: 129.96)
  • Sep BTP futures (IK) up 23 ticks at 154.31 (L: 154.11 / H: 154.32)
  • Italy / German 10-Yr spread 1.4bps wider at 105.2bps

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