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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

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A downside miss in the much-anticipated US CPI data release buoyed the European FI space Tuesday, with early supply-driven weakness reversing.

  • The Bund and Gilt curves bull flattened slightly, while Italy outperformed - 10Y BTP spreads/Germany hit lowest level since Aug 13 (98.1bp).
  • Supply this morning came from the UK (Gilt, GBP3bn), Germany (Schatz, E3.9bn allotted), Italy (BTPs, E9.0bn), plus E9bn EU NGEU 7Y syndication.
  • UK employment data came in stronger than expected; Aug CPI data Weds morning enters focus.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is up 0.5bps at -0.7%, 5-Yr is down 0.3bps at -0.644%, 10-Yr is down 0.9bps at -0.34%, and 30-Yr is down 1.4bps at 0.152%.
  • UK: The 2-Yr yield is up 0.3bps at 0.231%, 5-Yr is up 0.5bps at 0.419%, 10-Yr is down 0.7bps at 0.738%, and 30-Yr is down 1.3bps at 1.043%.
  • Italian BTP spread down 3bps at 98.7bps / Spanish down 1.4bps at 64.6bps