Two Way Flows Seen Tuesday; Periphery Spreads Widen

Core/semi-core EGBs currently sit mixed following two-way flows through this morning. After starting the day firmer alongside global core FI markets, Bund and OAT futures reversed course toward intraday lows before stabilising.

• Typically hawkish comments from ECB’s Nagel seemed to have a little more impact than they would normally given the dovish repricing that had been seen early this week.
• Bund futures are currently up 0.08 ticks today at 131.40 with 10y Bund yields up 0.3bp at 2.550% and Schatz yields down -0.9bp at 2.972%. The German cash curve is seen lightly twist steepening on the 10s, while OAT yields are flat to 2bp higher across the board.
• Euro area money supply for October was the data highlight this morning but had little meaningful market impact. Y/Y M3 growth came in a touch below consensus at -1.0% Y/Y and while household lending growth was revised lower to 0.6% Y/Y vs the prelim of 0.8%.
• Peripheries are generally seen underperforming, with spreads to Bunds tighter. The 10-Yr BTP/Bund spread is 5.1bps wider at 178.5bps, continuing the widening momentum seen following Lagarde's comments yesterday re: discussing PEPP reinvestments in the "not too distant future".
• The remainder of today's calendar is light, with Lagarde delivering a pre-recorded message at the European Financial Reporting Advisory Group Conference at 1600GMT. ECB's Lane also speaks after hours in a seminar on macroeconomic policy.