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Inverting Further


Weakness in German fixed income accelerates in recent trade, with the cheapening hastening as Bund futures breached previous session lows.

  • While there hasn’t been much in the way of fresh headline flow, some have outlined a delayed reaction to the bid in crude oil futures (now off best levels) and cross-core FI market impulses as key drivers.
  • Elsewhere, the gradual inclusion of the impact from a RTRS sources piece ran this morning, which noted that “Germany's Finance Minister Christian Lindner is planning net new debt of EUR16.6bn for the ‘24 federal budget, which includes record spending on defence,” has probably weighed. The sources went on to note that “the financial plan shows new borrowing falling to EUR15.0bn by 2027” and they estimate “there is still a gap of EUR14.4bn in the midterm budget plan.”
  • Bund futures last print -45, just above lows and within recent session ranges, while the German cash benchmarks are 1-7bp cheaper. The bear flattening momentum is also aided by similar moves on the Gilt curve and the bid in oil, allowing the 2-/10-Year German yield curve to press to a fresh cycle extreme.
MNI London Bureau | +44 0203-865-3809 |
MNI London Bureau | +44 0203-865-3809 |

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