Supply in focus this morning

After some strength shortly after the open for Bunds and gilts, gains have largely been retraced and core fixed income is now only marginally higher on the day.

• With the ECB and US CPI, the main market events of the week, both scheduled for Thursday and a relatively light economic data calendar until then, focus today turns to supply.
• The US is set to sell USD58bln of 3-year Notes while Italy is holding a 10-year BTP syndication (we look for the lower end of a E10-14bln range with books over E50bln). In addition, the Netherlands has sold E2.2bln of the 10-year DSL, the UK looks to sell up to GBP4.25bln 5/50-year gilts, Austria looks to sell E1.4bln 4/10-year RAGBs. There are also bill sales from the US, Spain, Belgium, Finland and the ESM.
• As mentioned, data is generally not top tier. German IP and Italian retail sales were both a bit disappointing. The German ZEW and final print of Eurozone Q1 GDP data complete the European highlights. US trade and JOLTs are the US highlights.
• TY1 futures are up 0-2 today at 132-05+ with 10y UST yields down -0.9bp at 1.561% and 2y yields unch at 0.156%.
• Bund futures are up 0.03 today at 171.78 with 10y Bund yields down -0.3bp at -0.202% and Schatz yields down -0.2bp at -0.671%.
• Gilt futures are up 0.01 today at 127.17 with 10y yields down -0.2bp at 0.803% and 2y yields up 0.6bp at 0.087%.