Weakness In Equities Limits Follow Through From Hawkish ECB Speak

The aforementioned downtick in equities, as well as related spill over to oil prices (further aided by an uptick in the broader USD), leaves EGBs off of session cheeps after several bursts of hawkish ECB speak (albeit from the historically hawkish side of the Governing Council) applied pressure at different points of the morning.

• The prevailing cross-mark market tone leaves ECB pricing at, or just below, levels seen this morning, which has allowed the core EGB space to pare the bulk of its losses, while peripheral performance is more mixed, with spreads vs. Bunds holding wider.
• Bund futures trade a little shy of their session bests, although all of the major German FI futures are firmer on the day. The bund curve has bull steepened, with benchmark yields running flat to 2.5bp richer.
• French, Dutch & Belgian spreads to German equivalents are a touch wider to flat.
• Comments from ECB’s Villeroy & Schnabel provide the highlights on the remainder of today’s regional docket.