EGBs & Gilts Off Best Levels, BTPs Continue to Widen

Bund and gilt futures pull further off best levels, with crude oil futures away from pull back lows and equity futures off session lows.

• Bund futures are now +25 or so, with German cash benchmarks 2.5bp richer to 1.5bp cheaper, as the curve twist steepens.
• Spreads to Bunds are still little changed to wider on the day, with fresh widening pressure seen in BTPs in recent trade (which could be spilling into outright pressure for the wider EGB space).
• Note that ECB hawk Knot recently noted that he is open to the idea of lifting the MRR of banks ‘in principal,’ but stressed that he needs to see a more detailed cost-benefit analysis on the matter, with his mind not made up as of yet
• Gilt futures show +30, with cash benchmarks there 1bp richer to 2bp cheaper. The wings are now softer on the day, while the belly/intermediates outperform.