Bund Market Review- Lloyd Bank

The Bund market seems to have found a balance in current levels. 

The yield movements the last 2 days have pushed more Bunds above the -20bps eligibility threshold while  undesbank's Dombret stated yesterday that "there's no doubt in my mind that we will acquiring over the next 19 months 190 billion euros worth of German government bonds and agencies"; These 2 factors fuelled a small steepening move in 5s30s yesterday. 

A strong sell-off in USTs today should drag Bunds higher but the move's beta will be very low. However, such a move could push a number of bunds back in positive-yielding territory and allow the Bundesbank to be more active in the front-end than seen last week. 

Lloyds Bank notes...

Finally, the ECB is meeting again today (non-rate setting meeting) an increase in Greece's ELA provision looks unlikely; especially as during the past 24 hours there seems to be breakdown in negotiations between Greece and its creditors.