Generally Flat To A Touch Firmer, ECB On Deck

Bund futures trade around mid-range, stabilising after the early pull away from best levels.

• That leaves the contract +20 or so, with the German cash benchmarks running 0.5-1.5bp richer, lightly steepening.
• Headline flow has been limited, with the usual comments surrounding pre-ECB positioning evident.
• ECB-dated OIS shows a little under 17bp of tightening for today’s meeting, with terminal deposit rate pricing sitting bang on 4.00%. A reminder that Tuesday’s (single-sourced) hawkish ECB sources piece from RTRS biased pricing higher yesterday, tipping the odds of a hike beyond 50/50 in the market’s view.
• Our full preview of the cliffhanger event can be found here.
• Core/semi-core EGB spreads to Bunds are little changed, while peripheral spreads to 10-Year German paper sit within 1bp of yesterday’s closing levels.
• A quick reminder that Italian PM Meloni ruled out scrapping the banking tax late on Wednesday, although she left the door open to amendments as long as the tax take surrounding the measure still contributes ~€3bn.
• Irish supply saw decent demand as the NTMA rounded off its scheduled issuance for calendar ’23.