Goldman Sachs: Recovery Fund Agreed, BTPs Lead The Charge

Goldman Sachs note that the "EU Council agreed on the details of the EU
Recovery Fund. The underlying details were in line with our expectations,
although the decision came a little earlier than we expected. The initial
reaction in European sovereign spreads broadly matched our views, but
since then BTPs have outperformed substantially. Strong PMIs also
suggest the recovery is ongoing in Europe, but as above improving data
should eventually see some repricing higher of core yields through Q3.
We note that 10y OAT-bunds were steady on the week after Monday's
compression, and we continue to favor trading Italy and Spain vs France
rather than vs bunds."