As mentioned elsewhere, the lack of meaningful escalation in the Israeli-Hamas conflict, coupled with U.S. efforts to prevent wider escalation across the Middle East, has allowed a chunk of Friday’s geopolitical risk premium to be unwound, pressuring core global FI markets early this week.

• That leaves Bund futures -45, a little above Friday’s worst levels, while German cash benchmarks run 1-6bp cheaper as the curve bear steepens.
• EGB spreads to Bunds are little changed to narrower on the day, generally unwinding some of Friday’s geopolitical hedging-centric widening.
• A raft of weekend ECB speak failed to move the needle, while recent budget-related headlines out of Italy have also failed to provide meaningful surprises (although the 10-Year BTP/Bund spread has moved off session tights).
• ECB speak and geopolitical headlines should receive most of the focus as the day rolls on.