BONDS: Off Highs

Core global FI markets are back from early London highs, with little in the way of fresh fundamental developments noted since the open.

• Spill over from the late Wednesday rally in Tsys provided early support, before an extension of the move off lows in equity futures accelerated and applied weight to bonds.
• Bunds toped out at 129.90, with next resistance located at the August 14 located at 130.06. German yields are flat to 1.5bp higher, curve bear flattens.
• OATs outperform other EGBs given the aforementioned recovery in the wider risk backdrop (as opposed to any France-specific developments). We provided some deeper colour on the French political situation, potential election horizon and OAT spreads in a recent run of bullets.
• 5- to 10-Year BTP & CCTeu supply passed smoothly.
• Lower tier Eurozone confidence data failed to move the needle, with the same holding true for money supply readings.
• Comments from ECB’s Rehn failed to provide any actionable information. Dated OIS still price ~20bp of ECB easing through June ’26.
• Gilt futures have also faded from early session highs, with bears remaining in technical control. Initial resistance (91.24) still untested, initial support located at yesterday’s low (90.22). UK yields little changed across the curve.
• GBP STIRs consolidate around 10bp of further BoE easing through year-end.
• Secondary readings of Q2 U.S. GDP and the weekly jobless claims releases headline a limited macro calendar today.