Futures Hold Near Lows, But BTP/Bund Spread trades Sub-130bps

Core/semi-core EGBs are near intraday lows as the details of the US CPI report are digested.

• Bund futures are -19 at 133.20, but the first meaningful support level remains some way off at the Mar 5 low (132.36).
• While some 50 ticks off highs, BTPs are still +15 on the day.
• BTP futures were unable to test the March 7 high at 120.05 before fading from best levels.
• The BTP curve has bull flattened, with yields 1.5 to 4.5bps lower.
• The 10-year BTP/Bund spread is off narrowest levels with the 22’ low providing some support, but the spread sits below 130bps.
• We haven't seen much in the way of meaningful drivers for spread compression intraday (German paper underperforms most EGBs).
• That leaves focus on factors that have driven early ’24 spread compression i.e. carry, low enough financing costs and expectations for ECB easing later this year.
• European equities are higher on the day but still short of Friday's highs.
• Tomorrow's regional docket is quiet, with January’s Eurozone industrial production release due.