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Equities Off to a Mixed Start, But Core Fixed Income Under Pressure

GLOBAL MARKET/OPINION

After the firm positive close yesterday, European equity markets are consolidating this morning, with German stocks lower, the EuroStoxx 50 flat and Italian, UK markets a touch higher.

US stock futures managed to finish in the red yesterday, selling off early gains (prompted by Trump pondering a capital gains tax cut and news of a Russian COVID vaccine) after a new cycle high was printed in Tuesday Asia-Pac hours. Headed into the NY crossover, the e-mini S&P has recovered around 30 points off yesterday's lows with 3,379 the initial upside target ahead of the intraday record level of 3,397.50 printed back in February.

Despite mixed equity markets, core European fixed income trades heavy, with Bund trading particularly heavy as the pullback from cycle highs printed last week continues. Heavy supply in Europe today (German 2030 Bund, UK 2028 Gilt) continues to weigh. First key support for Bund futures sits at 175.95, the Jul 24 low.

Peripheral European/German 10y spreads are tighter as a result, with Spanish, Portuguese and Greek spreads seeing notable moves.

MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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