Flat To A Touch Cheaper To Start

The light downward bias in core global FI markets, including Bunds, sees Euribor futures a little lower early on. Still ranges remain tight, with contracts running flat to -1.5bp.

• Italian headlines remain front and centre after Friday’s RTRS source report gave some details re: the widely expected deterioration in government deficit/GDP projections.
• Since then, BBG (citing an amendment document) reported that the Italian government will allow banks to opt out of the controversial windfall tax if they set aside additional capital reserves (“lenders can opt out of the tax if they allocate 2.5x the amount owed to strengthening their common equity tier 1 ratio as non-available reserves”).
• Weekend ECB speak saw Villeroy play down the recent impact of the rise in fuel prices on the ECB’s inflation fight, while he intimated his preference for patience/persistence with interest rates, as opposed to further hikes.