Periphery Spreads Flat to Tighter vs Bunds, Await ECB

Periphery spreads are flat to 3bps tighter this morning as markets prepare for the ECB later today.

• The extent to which PEPP reinvestments are discussed in this month's meeting is the key focus for peripheries, particularly Italy, where the 10-year BTP/Bund spread has widened around 40bps since August on the back of fiscal and QT-related concerns.
• Intraday, Italy is seen outperforming at the short end, while Portugal and Greece see the largest fall in yields at the mid/long-end. The Italian 2s10s curve is seen bull steepening 2.1bps to 89.7bps, while Portuguese and Greek 2s10s twist flatten.
• The GGB/Bund spread is 2.4bps tighter at 136.7bps while the BTP/Bund spread is 0.1bps wider at 202.7bps.
• Today's data calendar pre-ECB has been light, with Spanish unemployment seen ticking up to 11.8% in Q3 (vs 11.6% prior).