Softer Ahead Of US NFP; Peripheries Widen

Core/semi-core EGBs are off intraday lows but remain softer on the day, with global markets squarely focused on the US labour market data released at 1330GMT.

• Bunds and OATs began the European session weaker as another round of pressure for long end JGBs provided a headwind for core global bonds in Asia hours, though a Reuters sources article playing down the BoJ's expected pivot away from NIRP may have helped EGBs find a base in recent trade.
• The latest uptick in equity futures may be supporting the sell-off, as participants substitute out of EGBs to take part in the rally. Higher Brent crude futures will also be providing pressure.
• That leaves Bund and OAT futures down around 40 ticks each today, with cash curves seen bear steepening.
• Peripheries are wider to Bunds in spite of the risk-on tone in equity markets, led by BTPs with the 10-Yr BTP/Bund spread is 2.0bps wider at 176.4bps.
• Domestically, there will also be some interest in the Ecofin meeting of finance ministers, with hopes that a deal on fiscal rules can be reached.
• Ahead of the US data later, the local docket is otherwise quiet today (note the ECB are in their pre-meeting quiet period).