OIL: Russia's Crude Production Seen Declining in 2027: Rystad

• A decent LT Bund auction with the bid-to-covers and bid-to-offers all higher than the previous opening of each line.
• The lowest accepted prices of each line were also higher than the pre-auction secondary market mid-prices at the time of the auction cut-off.
• There appear to be no concerns showing here following last week's soft 10-year Bund auction.

Bund futures have moved away from session lows but remain -22 ticks at 125.02. A pullback in Brent crude futures supported this move up from 124.79. However, from a broader perspective both oil and gas prices remain up strongly on the week, pressuring European bonds. Yesterday’s US CPI-inspired bid has essentially been completely unwound. 

• A short-term bear cycle in Bund futures remains intact. Next support is seen at 124.70, a Fibonacci retracement level. Resistance at the 50-day EMA is at 126.08. A clear break of this level is required to signal a possible reversal. 
• The German curve has lightly bear steepened, with Schatz yields little changed and 30-year yields up 1.5bps. Results at today’s LT Bund auction were decent, with the bid-to-covers and bid-to-offers all higher than the previous opening of each line.
• 10-year EGB spreads to Bunds are up to 1.5bps wider on the session, with BTP/Bunds inching above 78bps.
• Eurozone May industrial production was weaker than expected at -0.2% M/M (vs 9.3% prior). Meanwhile, the fourth reading of Q1 GDP was revised up to 0.0% (vs -0.2% prior) following the latest upward revision in Ireland.
• ECB’s Panetta and Cipollone did not add much new to the policy debate, with the latter emphasising that second round inflation effects are not yet being observed.
• The ECB’s Nagel is scheduled to speak later today, but he has provided  a lot of comments recently, leaving more focus on Middle East headline flow and US data.