Bund futures have closed the opening gap lower, but remain -21 ticks at 132.89 today. Gilt futures have similarly bounced from intraday lows, now -32 at 95.98.

• Overnight weakness (also seen in crude oil/gas futures) was seemingly a function of unwinding geopolitical risk premium after Israel’s restrained weekend attack on Iranian military targets.
• There was no obvious headline driver for the recovery from lows, which may reflect lower inflation expectations stemming from the energy pullback.
• Bund and Gilt yields are up to 1bp higher at typing.
• The 10-year OAT/Bund spread is 1.5bps tighter at 73.5bps, after the worst-case scenario of a rating downgrade from Moody’s was avoided on Friday (rating was affirmed at Aa2). The agency opted to place the country’s outlook on Negative, which was in line with consensus expectations.
• Meanwhile, broader 10-year peripheral spreads to Bunds are tighter with European equity futures 0.4% higher.
• This week’s Eurozone calendar is headlined by the flash October inflation and Q3 GDP rounds, beginning on Wednesday.
• In the UK, focus remains on Wednesday’s budget. MNI’s preview is here: https://mni.marketnews.com/3YBr39n