Spreads & U.S. Macro Risk Set To Dominate

Bunds remain underpinned with the contract through yesterday’s high.

• Next resistance is the 20-day EMA (130.77), with the contract showing as high as 130.48 thus far.
• Spread dynamics and the fallout from the French political situation will continue to dominate.
• Broader semi-core and peripheral spreads came back from wides on Tuesday.
• The breakdown of election alliance talks between parties on the right of the French political spectrum will have aided the move off of yesterday’s session wides in spreads.
• ’23 wides in the OAT/Bund spread held on a closing basis, while BTP/Bunds failed to hold a brief move above 150bp.
• OAT futures have looked through yesterday’s high.
• Note that the BdF cut its ’25 & ’26 GDP forecasts late yesterday.
• Comments from French President Macron (around 12:00 local time) will be eyed.
• Fitch has become the latest rating agency to issue a warning on the French political situation.
• Final German CPI matched the initial flash reading.
• ECB speak from de Guindos, Nagel, Vujcic and Patsalides is due today.
• Early comments from GC member Kazaks failed to add to the broader debate, pointing to the need for gradualism when it comes to further rate cuts.
• Macro focus is on the U.S. CPI data and FOMC decision.
• On the supply front, Germany will look to sell EUR4bn of the 2.20% Feb-34 Bund.