Stabilising In Recent Trade, Still Comfortably Cheaper & Steeper, With BTPs Wider

Little to really add after the stabilisation around the ~128.80 mark in Bund futures, with the contract last -60. ~15 ticks off lows, briefly retaking 129.00 before that level gave way again.

• German cash benchmarks sit 0.5-8.0bp cheaper, with the 5s30s curve moving to the steepest level seen since early June.
• Core/semi-core 10-Year spreads to Bunds are little changed on the day, with bear steepening also seen on those curves.
• Peripheral spreads are little changed to ~2bp wider, with BTPs continuing to lead spread widening. As noted earlier, Italian fiscal headwinds, outright pressure and a negative session for equities are seen as key drivers of that widening, after rumoured changes to the controversial Italian banking tax provided some support early on.
• ECB-dated OIS trades either side of flat on the day, with already seen ECB speak pointing to belief in the need to hold interest rates at current levels for as long as is necessary.
• Further ECB speak from Lagarde and Schnabel will cross later.
• The €IG supply slate continues to build, which will be adding background pressure.