Off Intraday Highs After Rallying Alongside USTs

{EU} EGBS: Off Intraday Highs After Rallying Alongside USTs

Core/semi-core EGBs are off intraday highs after rallying alongside USTs following today’s US survey data and the sell-off in oil futures.

• The US ISM manufacturing survey saw a weaker than expected headline reading and a lower-than-expected prices paid component.
  
• Taken alongside the >3% fall in Brent crude futures today, Bunds trade +60 ticks at 129.94, after reaching an intraday high of 130.16.
• While natural gas futures are still over 5% higher today (following supply outages triggered by an abrupt halt to Norwegian gas flow), the retrace from intraday highs will have also eased pressure on EGBs.
• German and French cash yields are 6 to 8.5bps lower today, with the belly of the curve outperforming.
• 10-year peripheral spreads to Bunds have moved away from tightest levels, with European equity futures now trading on the defensive.
• Tomorrow’s data calendar includes unemployment data from Spain and Germany, alongside issuance from Austria and Germany (who come to the market with both a conventional Schatz auction and a syndicated tap of the 2053 Green Bund).
• Our ECB preview was released today. See here.