EGBS: Bearish Theme In Bunds Remains Intact

Bund futures are down 12 ticks at 129.67, currently at fresh session lows. A bearish theme in Bunds remains intact, with yesterday’s low at 129.54 providing the initial downside target. On the upside, resistance around the 50-day EMA, at 130.44, has recently been pierced but for now, remains intact. A clear break of it is required to highlight a possible reversal. 

• Futures volumes are once again below recent averages, with little market moving headline flow to note this morning.
• The German curve has lightly bear steepened, with 30-year yields up 2bps and 10s30s just below the 50bp handle.
• German final June HICP confirmed flash estimates at 2.0% Y/Y, with services inflation confirmed as soft. Meanwhile, Italian May industrial production was weak.
• Light outperformance in 10-year peripheral spreads to Bunds, with BTP, SPGB and PGB spreads ~1bp tighter.
• ECB’s Cipollone, Escriva and Villeroy are schedule to speak today, but we don’t expect any new signals.