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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor


Bunds continued their ascent Friday on weak August Eurozone PMIs, though early flattening gave way to modest steepening.

Indeed, Gilts counter intuitively outperformed Bunds despite a strong UK PMI number and good retail sales figures, with the short-end remaining relatively anchored, while 10-Yr BTP yields hit the widest levels since Aug 7 (146.9bps high) before coming back down slightly.

Next week sees appearances by ECB's Schnabel and Lane, while MNI estimates EGB issuance at EUR17.8bln (incl Germany, Italy, Belgium, and Portugal). German IFO and French prelim Aug CPI are among the few data highlights. Closing levels:

  • Germany: The 2-Yr yield is down 0.8bps at -0.683%, 5-Yr is down 1bps at -0.699%, 10-Yr is down 1.1bps at -0.507%, and 30-Yr is down 0.4bps at -0.075%.
  • UK: The 2-Yr yield is down 1.3bps at -0.047%, 5-Yr is down 1.6bps at -0.046%, 10-Yr is down 1.9bps at 0.206%, and 30-Yr is down 2.6bps at 0.782%.

10-Yr Periphery EGB Spreads:

  • Italian BTP spread up 4.1bps at 145.1bps
  • Spanish bond spread up 1.8bps at 80.5bps
  • Portuguese PGB spread up 1.4bps at 83.6bps
  • Greek bond spread up 1bps at 160.1bps
MNI London Bureau | +44 203-865-3807 |