Rallies Capped

Financing needs seem to help cap any rallies in the broader EGB space, although ranges remain contained, with 10-Year benchmark yields operating a little off last week’s extremes and the lack of U.S. participation limiting wider activity.

• In terms of the details most of the issuance focus has fallen on:
• Discussions re: European defence capabilities and related funding.
• The recently announced (albeit widely expected) syndication of 10-Year EU bond issuance.
• An Italian exchange auction scheduled for tomorrow.
• Our policy team’s recent piece noting that France backs a proposal for joint EU retail bonds.
• Bund futures look through early session lows but stick to a narrow 34-tick range, last -13 at 132.83.
• Last week’s low at 132.71 provides initial support.
• The German curve twist steepens with yields running 1bp lower to 2bp higher.
• Peripherals continue to trade within 1bp of Friday’s closing levels vs. 10-Year Bunds, with spreads now mixed on the day after moving away from session/cycle tights (Depending on metric observed).