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Gilt/Bund spread widening

BONDS
  • Bund has closed the small opening gap down to 132.26 earlier, printed a 132.21 low.
  • Initial support is still at 131.81 and resistance moves down to 132.81.
  • German supply shouldn't weigh on the contract and we are now edging back to the Bund's intraday high.
  • As previously mentioned, August is seasonally a bullish Month for the German contract, but price action should be somewhat limited at least this week, with Real Money waiting on the NFP/AHE Friday.
  • Some early divergence between Gilt and Bund this morning, with investors turning their attention towards the BoE decision tomorrow.
  • As such, the Gilt/Bund spread trades 4.3bps wider and eyeing a test towards the 190bps handle, while initial resistance is at 194.5bps.

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