Peripherals Hold Wider On The Day

The downtick from hawkish extremes in ECB-dated OIS and the (eventual) post-U.S. CPI outright bid does little to shelter peripheral spreads, with differentials to Bunds at/near wides of the day (1.5-3.5bp wider).

• Participants remain cautious ahead of tomorrow’s ECB monetary policy decision, even with some questioning the single sourcing of last night’s hawkish source report from RTRS.
• BTPs widen the most, despite decent enough demand observed at this morning’s BTP auctions.
• A quick reminder that 10-Year BTP yields hit multi-month highs ahead of this morning’s supply.
• On the Italian fiscal front, the country’s Economy Minister noted that there is no plan to extend the superbonus tax break.
• The modest morning tightening GGBs has more than reversed.
• A quick reminder (and particularly of note for peripherals) of our policy team’s understanding that “the ECB is only likely to begin in-depth discussions over its balance sheet reduction after the conclusion of its operational framework review due by the end of the year.”