Pressured Early

Bund futures breached Friday’s base during the overnight session and then moved below Thursday’s low ahead of the old futures open, last sitting -55 or so. Asia-Pac reaction to Friday’s cheapening in U.S. Tsys has helped the direction of travel overnight, while “constructive” ongoing U.S. debt ceiling discussions and Fitch’s move to affirm Italy at BBB; Outlook Stable will have also factored in. The 20-day EMA and May 10 low (135.61/134.99) present the immediate areas of technical support.

• Weekend ECB speak saw Vice President de Guindos point to the current monetary policy cycle moving into the home stretch, highlighting a meeting by meeting, data-dependent stance, while he also suggested that QT has led to a 60-70bp lift in government bond yields. Elsewhere, Visco generally echoed de Guindos, while highlighting that there was too much uncertainty present to predict the Bank’s exact rate path. The two stuck to the dovish side of the spectrum, as is their norm.
• Eurozone industrial production data headlines the regional docket on Monday, with German wholesale prices in the rear-view (modest M/M & Y/Y losses were recorded in the latter)
• Elsewhere, ECB speak from Nagel is due and Slovakia will come to market with issuance across the belly and intermediate zone. It is also worth noting that ECB’s Lagarde & Panetta will be in attendance at the Eurogroup meeting, so we may get some headlines there.