Still Long Duration And Looking For Range Trading in EGB Spreads

We still recommend duration longs, ideally focusing on intermediate forwards. ECB commentary and modestly better newsflow in France helped a retracement in EGB spreads, despite recently bearish client sentiment. Short-end yields are barely down on the week as Middle East headlines continue to weigh on expectations despite some alleviation in sovereign stress: hold 3y2y long. We expect bull-steepening in the coming quarters, and we attribute the bulk of the recent long-end underperformance to US term premium build-up. EGB spread tightening is supportive of our now more neutral view;