Greek Outperformance Noted, Core & Semi-Core Trade Heavily

Bunds managed to register an incremental fresh session low on the back of the slightly firmer than expected preliminary July core Eurozone CPI reading and Q2 GDP data, before nudging away from lows, back into the pre-data range. That leaves the contract running 45 ticks or so worse off, while German cash trade sees the major benchmarks running 1.5-3.5bp cheaper, with the belly and intermediates leading the move.

• Similar moves are seen across most of the core/semi-core EGB curves.
• Some tightening in Italian & Greek 10s is seen in the periphery (~1.5bp & ~7bp vs. Bunds, respectively). Focus on the potential for Greece to regain IG status with Scope on Friday (although that isn’t enough re: ECB purchase/bond index inclusion) is a potential driver for the GGB move.
• The Asia-Pac move in JGBs & U.S. Tsys helped set the cheapening direction, with a rally in Euro STOXX 50 futures through last week’s cycle high providing fresh headwinds.
• Tier 1 regional data had little impact on ECB-dated OIS, with ~9bp of tightening showing for the September meeting and terminal deposit rate pricing hovering in the 3.92-3.93% area.
• Cross-market moves will be eyed as we move ahead today, given the lack of meaningful European data and ECB speak scheduled in that window.