Off Best Levels, EGBs Widen Further Vs. Bunds As Equities Struggle

Bonds are firmer on the day but off highs.

• Bulls failed to push German 10-Year yields meaningfully below 2.20%. The failure to take out that level triggered a bit of a retracement.
• An extension of yesterday’s risk-off trade was initially seen, with tech stocks under pressure in Asia following earnings reports from Intel and Amazon.
• Catch up to Thursday’s weakness in U.S. & European equities, as well as assessment of U.S. data, also factored in there.
• German yields are ~2bp lower, seeing a parallel shift across the curve.
• EGB spreads to Bunds are wider given the broader risk-off trade,
• BTP/Bunds moved above 145bp for the first time since early July, before fading.
• OAT/Bunds back above 75bp.
• Gilt yields are 1-5bp lower, bull steepening.
• Futures volumes are elevated across core contracts.
• The U.S. NFP report dominates today’s calendar.
• Payrolls are expected to moderate further in July. Hurricane effects add a further layer of complexity.
• Our full preview of the release is here.
• BoE chief economist Pill will speak again today. He was a hawkish dissenter, voting against yesterday’s rate cut, before stressing that the BoE has not committed to further easing.