Underpinned

Early post-Christmas cash trade sees a bull flattening bias on the German curve, with benchmark yields running 1.5-4.5bp lower on the day.

• Both the 2s10s and 5s30s German curves sit comfortably within the month-to-date ranges.
• Bund futures sit just off best levels of the day, last +39 at 138.29.
• Last week’s high in that contract has been broken and bulls now look to the 3.382 projection of the Nov of the 13-17 -24 price swing (138.49).
• Spreads to Bunds are generally marginally wider across EGBs, with OATs and Belgian paper providing the exceptions, as modest tightening is seen there.
• BTP futures have broken initial Fibonacci resistance.
• Momentum/the aforementioned technical breaks and a firmer start for gilts helps underpin EGBs.
• Elsewhere, the previously flagged, reduced level of EU financial support for Ukraine, touted by FT sources, will also be contributing (with 10-Year EU paper tighter to Germany on the day).