EGBs-GILTS: Opening The Quarter With Modest Weakness

A weak start for core FI as risk appetite picks up, with equities sharply higher on the session. We get final PMIs as well as solid supply and a couple of central bank speakers incl BOE's Bailey.

• Gilt and Bund curves bear steepening as the month/quarter get underway; periphery spreads flat, with the exception of Greece (1bps tighter to Bunds).
• Retail German retail sales were weaker than expected (and weaker revisions M/M though stronger Y/Y NSA). Spanish PMI came in slightly above expectations; Italy exactly in line. Rest of the morning are finals.
• Spain sells up to E5.75bln in bonds/linkers, France up to E11bln in OAT, UKGBP3.5bln of Gilt.
• BOE's Bailey speaks at Mansion House (0900BST) and later at 1000BST, with ECB's de Cos speaking at 0900BST.

Latest levels:

• Sep Bund futures (RX) down 22 ticks at 172.39 (L: 172.32 / H: 172.54)
• Sep Gilt futures (G) down 16 ticks at 127.94 (L: 127.89 / H: 128.01)
• Sep BTP futures (IK) down 14 ticks at 151.27 (L: 151.26 / H: 151.47)
• Italy / German 10-Yr spread 0.1bps wider at 102.7bps