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Softer As Geopolitical Risk Premia Ease

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Core/semi-core EGBs are softer this morning, as markets assess weekend developments in the Middle East and tentatively assign a reduced risk of further escalation in tensions at this stage.

  • Bunds are -47 at 132.24. A bear threat remains present, with Friday’s gains deemed a correction at this stage. The first support is 131.31 (April 11 low) while the key support and bear trigger remains at 131.23 (Feb 29 low).
  • Lower than expected February Eurozone IP (-6.4% Y/Y vs -5.5% cons) will have eased some pressure on the space, but we note that Ireland’s -34.9% Y/Y skewed the data to the downside.
  • The German and French cash curves have bear steepened this morning, while 10-year periphery spreads to Bunds are generally tighter.
  • Tomorrow’s German ZEW survey and Wednesday’s Eurozone March final CPI headline the regional data calendar this week, alongside several ECB speakers.
  • ECB’s Simkus noted this morning that he sees a chance of a July cut alongside June.
  • We also receive remarks from ECB Chief Economist Lane at 1300BST/1400CET today, with de Cos speaking later this evening.
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Core/semi-core EGBs are softer this morning, as markets assess weekend developments in the Middle East and tentatively assign a reduced risk of further escalation in tensions at this stage.

  • Bunds are -47 at 132.24. A bear threat remains present, with Friday’s gains deemed a correction at this stage. The first support is 131.31 (April 11 low) while the key support and bear trigger remains at 131.23 (Feb 29 low).
  • Lower than expected February Eurozone IP (-6.4% Y/Y vs -5.5% cons) will have eased some pressure on the space, but we note that Ireland’s -34.9% Y/Y skewed the data to the downside.
  • The German and French cash curves have bear steepened this morning, while 10-year periphery spreads to Bunds are generally tighter.
  • Tomorrow’s German ZEW survey and Wednesday’s Eurozone March final CPI headline the regional data calendar this week, alongside several ECB speakers.
  • ECB’s Simkus noted this morning that he sees a chance of a July cut alongside June.
  • We also receive remarks from ECB Chief Economist Lane at 1300BST/1400CET today, with de Cos speaking later this evening.