US TSY FUTURES: FV/TY Steepener Blocked

SGE (18/12/26) 28/22ps, sold at 2.36 in 3k.

Bund futures have drifted towards session lows, currently -18 ticks at 131.60. Volumes are below recent averages, with proximity to US President-elect Trump’s inauguration and today’s US MLK holiday limiting activity.

• German cash yields are up to 1bp higher, leaving 2s10s at ~30.5bps, 5bps shy of this month’s highs.
• German December PPI was a little softer-than-expected at -0.1% M/M (vs 0.3% cons) but had little lasting market impact.
• ECB’s Schnabel and Holzmann provided characteristically cautious/hawkish comments over the weekend and this morning.
• Spreads have been set for today’s 3/10-year EFSF transaction.
• France has issued a mandate for a 15-year OAT transaction - MNI pencils in a transaction tomorrow with a E5-7bln size. Long-end OAT/Bund spreads have seen modest (~0.5bps) widening pressure following the announcement. A reminder that MT OAT and IL OAT supply is also due later this week.
• In the peripheral space, SPGBs and PGBs underperform a little, with spreads to Bunds 1bp wider.
• Global macro focus remains on Trump's inauguration this afternoon, and any immediate policy announcements. US tariff policy is a key source of uncertainty for the Eurozone economic outlook, and by extension ECB policy.