The risk-off tone has been offered additional pressure by OPEC+ headlines and Saudi quoting a 1.3mln BPD cut as excessive; this has given Bunds impetus to print a marginal new Mar. contract high at 163.35, with the German benchmark now trading around the 163.30 handle and 163.52/55 trend resistance up next. BTPs saw a kneejerk dip to 123.53 off the back of League and 5-star source reports that the far-right party are holding out for a 2.2% deficit/GDP target, but pared back the majority of this move to revert to the 123.80 area. Traders are now looking to tonight’s finalised budget details as advised by Deputy PM Salvini ahead of the Lower House and Senate votes tomorrow and Monday with market participants noting a fresh downside buyer via BTP options with a max pay-out should 10-year yields hit ~3.65%.
Gilts are still regaining some composure (+23 ticks) on risk sentiment, but still lag Bunds, after a couple of days of Brexit-driven beatings, with the 10-year eking out a high print of 123.31 after the UK’s 2049 auction that saw yields fall markedly from 1.826% to 1.0909%, and b/c climb from 1.76 to 2.40.
US 10-year futures are marginally up with yet more bull flattening as traders return to their desks to a rocky market after H. W. Bush’s memorial and confirm to the risk-off tone, with investors looking for further direction from multiple tier 1 data releases and multiple Fed speakers rounded of by Chair Powell at the end of the EU day and NFP tomorrow.