Mizuho Eye Potential Spread Entry Ops

Mizuho note that "BTP supply (both today's tap, and the post-summer need for issuance) may offer a chance to fade weakness, although tight technical ranges could preclude such opportunities. A EUR3bn tap for each of Dec30 and Jul25 will take both bonds' outstanding amounts to around their limits, and a new 5Y could come early Sep. Meanwhile, the Italian senate approving another EUR25bn of spending raises the prospect for even further acceleration in supply later in the year. We continue to see value in both outright EGB duration and on continued spread compression. Month-end extensions should support Bund, Bonos and DSL. Data is increasingly important now that the market has now come to terms with a second-wave. On this front, the EZ consumer confidence reading will be key. While EZ data surprises have lagged the US, consumer confidence has roughly moved in tandem. Consequently, it will be an important bearish sign if the notable dip seen in the US's July readings are replicated in the bloc. Whether consumer spending can weather the change in individual and business habits is probably the biggest unknown going forwards, and will be the most important factor in determining the developed world's bounceback. A US-style dip in sentiment could drive knee-jerk periphery spread widening, which could be a chance to add exposure there."