Softer On Thursday; Curves Steepen

Core EGBs are softer this morning alongside Gilts and USTs as participants take yesterday's rally as an opportunity to close out longs/enter shorts. Bund futures have retraced around 50% of yesterday's moves higher, with curves steepening globally.

• Gilts underperform core EGBs as comments from BoE Pill were less dovish than earlier in the week, while ECB-speak from de Guindos and Villeroy did not move the needle (the former noting that it was too early to consider cutting rate and the latter that further tightening would only come in the face of external shocks/surprises). Comments on the CB reserves/liquidity by Lane did not contain pertinent information on the Eurozone QT outlook.
• Bund futures currently sit -0.22 ticks lower today at 130.51, with the 20-day EMA at 129.44 the first support noted by our technical analyst. 10y Bund yields are up 2.6bp at 2.641% and Schatz yields are up 0.3bp at 2.995%.
• The 10-year GGB/Bund spread is 1.3bps tighter today at 127.1bps while other periphery spreads are flat/slightly wider on the day. The PGB/Bund spread has stabilised after two days of political-induced widening, with analysts having noted that spread tightening is likely to be contained as strong fundamentals reassert themselves in the medium-term.
• There is no data or supply of note the remainder of today, with Lagarde at 1730GMT the main event.