Without any noteworthy data releases scheduled in the Eurozone, impetus for the Bund future this morning could come from UK retail sales and, probably more importantly, from eurogovy supply activities.
Amid growing concerns about the handling of the situation in Greece, the upcoming elevated SPGB supply in risk-weighted terms (and the Belgian auction announcement) warranted marked concessions of late. However, with the 10y SPGB-Bund spread back at the upper bound of its range, we think chances are rather in favour of some near-term relief in ‘tier 2’ spreads out of today’s auction.
New BTAN Sep13: the grey market indicated a fair pricing on the French curve. Regarding RV we recommend exploiting the substantial credit curve roll-down of France vs. Germany in this area (13bp! over 12m) and like in particular buying the bond out of the rich OBLs 152 & 154.
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