EGBS: Bund Futures Off Lows Alongside US Tsys; Still Outperforming Gilts

Bund futures find a short-term base alongside US Tsys, with crude futures and US equities moving away from session highs.

• Bunds are currently +9 ticks at 128.20. For now, gains are considered corrective. A bearish trend theme is intact and the latest recovery is allowing an oversold trend condition to unwind. Initial resistance is the 20-day EMA at 128.94.
• The 10-year Gilt/Bund spread has moved away from session highs of 188bps, but remains 3bps wider on the day at 186bps following the hawkish BOE vote split earlier.
• No material reaction in German ASWs (vs 3-month Euribor) to comments from ECB hawk Holzmann, who floated the idea of an increase in ECB unrenumerated minimum reserves to 5-10%.
• 10-year EGB spreads to Bunds are biased wider, with European equities still under pressure. IGBs outperform, following the smooth passing of this morning’s supply (the 10-year IRISH/Bund spread is 1.5bps tighter at 26.5bps on the session).
• Tomorrow’s regional data calendar includes the January current account and flash March consumer confidence. Bank of Spain’s Escriva is scheduled to speak.