EGBS: Post Auction Bounce In Major Futures Fades

The post-OAT auction bounce in major EGB futures has largely faded, with OAT futures eyeing a test of session lows at 122.48. OATs are currently -28 ticks at 122.54, after bouncing to 122.77 following the auction cut-off.

• France sold MT OATs at the top of its target range (E12.992bln), with strong/in-line bid-to-cover ratios and lowest accepted prices above the prevailing secondary market mid-prices. IL OATs are due at 1050GMT.
• The auction has nonetheless helped the 10-year OAT/Bund spread unwind a portion of its earlier widening, though the spread remains 1bp wider today.
• Bund futures are -25 ticks at 131.60. The medium-term trend condition remains bearish, with a breach of the 20-day EMA at 132.32 required to strengthen a bullish theme.
• German yields are up to 1.5bps higher, with 10-year peripheral spreads to Bunds also widening.
• Bank of Spain Governor Escriva is scheduled to speak from 1030GMT, while the EC’s flash consumer confidence reading is due at 1500GMT.
• Regional focus remains on tomorrow’s January flash PMIs.