VIEW: Commerzbank: -0.4% Yield Resistance Continues To Hold

Commerzbank note that "Bunds are taking direction from US-Treasuries and the resistance area for 10y yields around -0.4% continues to hold. Upcoming ECB speakers (Knot, Weidmann) are unlikely to provide tangible colour whether the new Fed strategy may feed into the ECB's thinking given that the ECB's strategy review will not be concluded before H2 2021. While Weidmann has been open-minded for tweaking the current inflation objective he still favours a simple 2% target. This week's EUR inflation data should underscore the central banks' challenges in reaching the targets. Today's stable German inflation should remain consistent with a noticeable drop in euro area HICP tomorrow, especially in core inflation given the delayed summer sale discounting. Thus, EUR break-evens hold downside potential at pre-crisis levels, and we still see better value in buying Bund dips at -0.4% 10y yields. Supply will be another factor this week with the 10y Green Bund seemingly in the offing. Meanwhile, month-end support should be shallow given the usual modest index extension into September and today's UK bank holiday. German Länder could move into focus later in the week with more downgrade/outlook change risks from S&P looming large on Friday."