Remaining Underpinned

Hard to pinpoint a direct driver of the second-round bid in core global FI markets, continued focus on Chinese equity weakness (and a move off best levels for Euro Stoxx 50 futures) and geopolitical worry centred on the Middle East provide the most obvious headline points, although both were already established during the Asia-Pac session.

• The latter point (Middle East worry) also seems to have allowed the early supply news-induced move lower in crude oil futures to reverse.
• Peripheral EGBs are now wider vs. Bunds on the day with European equity benchmarks off bests, leaving the 10-Year BTP/Bund spread a handful of bp off the near 2-year tights flagged earlier, last printing at ~155bp.
• Also note that some Asia desks flagged an increase in latent demand for Tsys at current yield levels.