Off Best Levels, Curves A Little Flatter

Bund futures are back to early lows as the support surrounding the previously outlined moves in Chinese equities moderates.

• That leaves the contract -10 or so, with overnight lows being tested at typing, although the contract sticks comfortably within the confines of Friday’s range.
• The German cash curve twist flattens, with benchmarks 3bp cheaper to 0.5bp richer. 5s30s look through last week’s flats, but moves are limited.
• Most EGB curves also sit a touch flatter, with Friday’s ECB speak helping.
• 10-Year EGB spreads are little changed to a touch tighter vs. Bunds, with peripherals probably benefitting from the uptick in benchmark European equity indices and light tightening in regional CDS indices on the day.
• Austrian paper shows nothing in the way of notable reaction to the Fitch’s outlook tweak covering its sovereign credit rating (to stable from negative), in a move that left the rating and outlook in line with S&P & Moody’s.