The overnight Chinese monetary stimulus package has supported equities and crude oil this morning, weighing on core FI markets. 

• Bund futures are -22 ticks today at 134.28. First support is 133.92, the Sep 20 low.
• The German September IFO survey was weaker than expected, but this was telegraphed by yesterday’s soft flash PMIs, so did not move markets.
• Yesterday’s dovish repricing in EUR STIRs has nonetheless extended, with ECB-dated OIS now showing a ~50% implied probability of cut in October (vs 40% at yesterday’s close).
• This has insulated the short-end, with German 2-year yields little changed despite impending E4.5bln supply. The German 2s10s curve has steepened 3.8bps to 4.2bps at typing.
• 10-year peripheral spreads to Bunds are biased tighter alongside the equity strength.

Gilt bears have forced futures through initial support levels (99.06 & 98.92).

• Fresh extension lower would turn focus to key support at the September 2 low (98.11).
• Yields are 4-6bp higher across the curve, steepening seen alongside European peers.
• Hawkish adjustments seen in BoE-dated OIS, 123bp of cuts priced through June ’25 vs. ~128bp late yesterday.
• Impending comments from PM Starmer shouldn’t be market moving.