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Strong German Auction Fails To Have Lasting Impact

EGB SUMMARY

Bunds extended higher following a very good 30-Yr auction (BBG reports the 2.9x Buba cover was highest since 1997), with small tail and weighted avg price 101.53 well above 101.32 pre-auction mid.

However 30-Yr yields are now higher vs pre-auction, and RXU0 failed to breach resistance at 178.01, reversing course after midday and hitting session lows.

Against this backdrop, peripheries weakened, with the Italian 10-Yr BTP spread continuing to flirt with the 140bps mark vs Bunds.

US Fed minutes for the July meeting will be eyed by most market participants today to set the global tone overnight, with attention also on US 20-Yr supply.** Latest levels:

  • Sep Bund futures (RX) up 20 ticks at 176.63 (L: 176.42 / H: 176.87)
  • Sep BTP futures (IK) up 21 ticks at 148.05 (L: 147.71 / H: 148.15)
  • Sep OAT futures (OA) up 22 ticks at 168.64 (L: 168.4 / H: 168.85)
  • Italy / German 10-Yr spread 0.1bps wider at 139bps

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