Off Lows, GGBs Marginally Tighter After DBRS Upgrade

Bunds find a base alongside U.S. Tsys as the BoJ-driven weakness seen in Asia-Pac hours moderates a touch.

• That leaves Bund futures -20, while German cash benchmarks are 0.5bp richer to 1.5bp cheaper, twist steepening.
• Bears couldn’t force a challenge of initial technical support in Bund futures (130.35, the Sep 7 low).
• Most other EGB curves twist/bear steepen a little.
• Core/semi-core paper little changed when it comes to spreads vs. Bunds.
• Greek paper is the outperformer, although only marginally so, as 10-Year GGBs tighten by ~1.5bp vs. Bunds post-Greece’s (widely expected) IG status attainment at DBRS Morningstar on Friday. A reminder that achievement isn’t a gamechanger for GGBs on the index inclusion front.
• The regional docket is limited today.
• Eurozone commission marked down Eurozone GDP projections, while lowering its CPI forecast for ’23 & lifting it’s CPI outlook for ’24.
• While there is nothing formally slated on the EGB issuance front on Monday, we remain on the lookout for details of a possible EU syndication after the recent RFP and guidance (some desks look for a new 7-Year line).
• We also note that the net issuance backdrop is much more supportive for EGBs this week (negative net supply when accounting for coupons/maturity repayment).