Off Best Levels, Potential Italian Policy Move Sees BTPs A Little Wider

Bunds sit comfortably shy of best levels, with the move lower in TTF gas also off extremes and the momentum of the early move higher running out of steam as 10-Year Bund yields neared their August low.

• Bund futures are +45 or so, ~35 ticks off highs, while German cash benchmarks run 2-5bp richer as the curve flattens.
• The remainder of the core/semi-core EGB curves see similar flattening moves,
• Meanwhile, peripherals see mixed curve moves, although the general outright richening theme is apparent there as well.
• Spreads to 10-Year Bunds are generally little changed to a touch wider across the broader EGB sphere.
• Note that BBG sources have suggested that “Italy’s government is pushing to approve a borrower-friendly measure on bad loans by the end of the year as part of Prime Minister Giorgia Meloni’s drive to help troubled families and firms amid rising interest rates.”
• This triggered some light widening for BTPs, with investors closely scrutinising government policy after the surprise windfall tax on the banking sector.