Off Cheap, BTP/Bund Spread Eyes Widest Close Since Jan

Bunds have ticked away from session cheaps in recent trade, last -5, sticking comfortably within yesterday’s range thus far.

• German cash benchmarks are 0.5bp richer to 2bp cheaper, with light twist steepening seen.
• EGB spreads to Bunds are generally little changed to incrementally wider, with the BTP widening taking the spread to Bunds to the ~202bp area, on track for the widest close since early January.
• Pre-NFP European news flow has generally been centred on firmer than expected German factory orders data (which was boosted by a volatile component) and a RTRS source report suggesting that “Germany's government expects the economy to shrink by 0.4% this year in its draft autumn projections.” Such a move in the GDP projection would be in line with European Commission forecasts.
• ECB speak from Schnabel once again failed to firmly close the door on the potential for a further move higher in rates given upside risks to inflation. Meanwhile, Herodotou echoed his recent remarks.
• A quick reminder that the books of the latest BTP Valore issuance close at lunchtime. Order books have topped EUR16.5bn, The June issue saw E18.2bn total issuance (E17.2bn across the first four days and E1.12bn on day 5).