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Large Bund downside

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Westpac note that "net buyside flows increased in the first half of July, but by the end of the month the 20-day rolling delta again reverted into sell-side territory. That might suggest that the market was cautious of impacts surrounding the spread of the delta variant but has taken some risk towards the end of the month, anticipating a strong economic rebound post-lockdowns. Looking at the composition of investors, funded accounts and domestic real money surpassed sovereigns and emerged as the largest buyer this month, while the sell-side flows came from offshore real money accounts and corporates."

  • "The derivative pay-side flows seen in June continued to increase in July, picking up towards the end of the month, possibly from renewing maturing flows and risk taking in the new financial year. We also saw net selling of government bonds as well as buy-side support in the 5- to 10-Year maturities, but net selling in the 2- to 5-Year maturities late in the month, which supports the curve flattening trend we have been seeing."