EGBS: Off Lows But Bearish Technical Cycle Remains In Play

Core/semi-core EGBs are off lows to trade broadly flat this morning, providing some counter to the heavy selling seen over the past two days.

• While Spanish flash May HICP was a tenth above consensus at 3.8% Y/Y, the lack of details within the report make it hard to discern much read-through to the Eurozone-wide core figure due Friday.
• Elsewhere, the EC’s Economic Confidence reading was broadly in line with consensus while Eurozone unemployment reached a new all-time low of 6.4% (below the 6.5% consensus and prior).
• 5/10-year BTP supply from Italy will have helped cap rallies in the run-up to the 1000BST bidding deadline.
• Bunds are -3 ticks at 129.03, with a breach of the 20-day EMA at 130.54 needed to ease bearish pressure.
• The German and French cash curves are slightly flatter, with yields flat to 2bps lower today.
• 10-year peripheral spreads to Bunds have tightened this morning, with European equities also bouncing back from lows.
• A reminder that the ECB entered their pre-meeting quiet period today.
• This afternoon’s calendar is headlined by the second estimate of US Q1 GDP, alongside weekly jobless claims data.