EGBS: Short Of Intraday Highs As North American Matters Dominate

Bunds are just short of intraday highs as markets digest this afternoon’s North American macro events, with futures currently +21 at 131.35.

• The ISM survey consisted of a stronger than expected headline reading and a slight moderation in the rate of expansion in prices paid, providing conflicting signals for markets.
• While there was limited reaction to the dovish-leaning BoC decision, the initial comments at the subsequent press conference have supported bonds.
• Bunds reached intraday highs of 131.55 around the time of the ISM print before fading.
• After some volatility around the data, 10-year BTP/Bund spreads have returned to intraday tights, around ~3bps narrower on the day, printing ~130bps.
• Regional focus turns to tomorrow’s ECB meeting, where a 25bps cut is firmly expected.
• Supply from Spain and France is also scheduled tomorrow morning.