EGBs rallied on the back of the Spanish CPI data, with the move then extending as German regional CPI readings pointed to downside risk in this afternoon’s national flash reading ( click for further details on the German data)

• Bund futures extended through Friday’s peak but never tested 131.00, paring gains to last trade at 130.70. The speed of this morning’s move may have acted as a limiting factor, with an eye on EU supply also noted.
• German cash yields are 2.5-4.0bp lower across the curve, light flattening seen.
• OATs have benefitted from ratings relief after France avoided negative action from both Fitch (current rating: AA-; Outlook Stable) & Moody’s (current rating: Aa2; Outlook Stable) after hours on Friday. OATs outperform EGBs and core global peers across the curve as a result. Click for further colour.
• Spanish PM Sanchez has decided to stay on after tabling a potential resignation on the back of a corruption scandal surrounding his wife. SPGBs are little changed on the news, with little widening pressure seen ahead of time. Click to see why.
• Gilts follow broader price moves in EGBs, albeit lagging German peers across the curve. Futures had a look through Friday’s highs before fading, while cash gilt yields are 1-2bp lower, curve sees some light bull steepening.
• ECB-speak from Lane, Muller & de Guindos is due during the remainder of the day.