Under Light Pressure On A Mix Of Factors, Bears Can’t Meaningfully Break Monday Low

Bund futures have looked below yesterday’s low, although bears can’t force a clean break in the first instance, with the contract recovering to 132.30 from 132.16,

• Yields are 0.5-2.5bp higher as the curve bear flattens.
• Several Bund-bearish factors are noted this morning:
• A second day of EGB spread compression vs. Bunds as a little more of last week’s French political risk premium is removed (German ASWs are a touch narrower for a second straight day).
• An uptick in EUR5y5y inflation swaps as participants adjust to the NY continuation higher in crude oil futures
• A hawkish feel to the RBA’s post-meeting press conference.
• Elsewhere, the German debt office left its Q3 funding plans as they were, providing little tangible impact. This was widely expected as the supplementary budget has yet to be passed - so will more likely impact Q4 issuance (see previous bullet for deeper details).