Firmer But Underperform Gilts; Peripheries Mixed

Core/semi-core EGBs are firmer on the day but underperform Gilts following the weaker-than-expected run of UK economic activity data this morning.

• That data and a relatively well-received round of 30-Year supply out of the U.S. yesterday leaves Bunds up 33 ticks at 135.41 with the Dec 7 high of 138.81 remaining the first key resistance.
• Eurozone industrial production for October was weaker than expected and prompted a 10 tick selloff in Bund before recovering - the soft data was largely driven by Irish figures.
• Elsewhere, news that the German coalition has reached a deal to end the ongoing budget crisis has seemingly helped to cap rallies in Bunds, although no details released re: the accord are apparent at present. A press conference is expected later today.
• German and French cash curves bull flatten, with yields flat to -4.0bps lower.
• Periphery spreads to Bunds are generally little changed (+/- 1bp on the day), with Italian and Spanish spreads tighter and Greek/Portuguese wider. Italian 3/7-year supply at 1000GMT will have weighed in the run-up to the bidding deadline.
• Today's Fed meeting dominates the broader macro calendar ahead of tomorrow’s ECB decision.