Remain Weaker Amid Mixed PMI Signals

Core/semi-core EGBs continue to trade weaker this morning, as markets digest the totality of this morning's flash PMI round.

• After reaching the lowest levels since November '23 following a strong French PMI print, Bund futures more than recovered after Germany's manufacturing PMI was weaker than expected. The overall Eurozone services print was above consensus, reaching a 50-handle for the first time since July '23.
• Within the PMIs, we note that there was a seemingly limited impact from Red Sea tensions on manufacturers, though services firms in France and Germany continue to cite wage pressures as a source of inflationary pressure.
• Bunds are -19 ticks at 132.40, with the first support now at 131.73 (1.0% 10-dma envelope). The contract reached an intraday low of 131.78 following the French data.
• The German cash curve has bear flattened on the day (a continuation of yesterday afternoon's dynamics), with yields just off year-to-date highs recorded this morning.
• Periphery spreads to Bunds are tighter, with European equity markets still higher on the day, even as Estoxx futures have moved off intraday (and near-record) highs.
• Eurozone final February inflation was in line with flash estimates.
• The remainder of today's regional docket is light, with this afternoon's US data (IJC, flash PMI) likely to garner cross-market interest.