Bunds: chasing US Treasuries higher post-Fed, and building in BTP premium

A double-whammy for the 10 year German benchmark off Thursday’s Eurex open, with a firm UST bid to factor in after a dovish-neutral take from the latest FOMC guidance and policy statement plus a healthy safe-haven mark-up given the latest slide in Italian bonds on yet more 2019 budget divisions within the coalition Government that could delay the eagerly-awaited deficit announcement. The situation in Rome remains very uncertain and fluid amidst further speculation and denials that Finance Minister Tria has offered or rather threatened to resign amidst pressure from the League and 5-Star to push the deficit to 2.4% vs sub-2%, and to top it all there is another hefty slug of debt issuance to consider. Away from Italy, preliminary German CPI data, pan Eurozone sentiment indices and ECB speakers all on the docket ahead of month/quarter/Japanese half year end tomorrow, with index durations above average. Back to Eurex, Bunds are 60 ticks ahead within a 158.70-54 range vs yesterday’s 158.04 close, with 10 year BTPs over a full point adrift at worst sub-126.00.