Further potential for bull-flattening of EGB curves

News that the ECB will start its PSPP on Monday as well as the remark that the ECB will buy bonds at negative yields up to the deposit rate at -20bp is positive news that argues in favor of further bull flattening of EGB curves.
 
In terms of data, next week is dominated by the US, where further signs of improving labor market conditions are likely to weigh on the US curve prior to the FOMC meeting on 18 March. 

Unicredit notes in a report on Friday:

• We expect widening in UST-EGB spreads. Periphery-core spreads in the euro area are likely to tighten further with 10Y BTP-Bund and SPGB-Bund spreads clearly stabilizing below the 100bp threshold on a lasting basis.
  
  
• We expect EUR 19-23bn of gross supply, half coming from core countries (Germany and the Netherlands) and half from the periphery (Italy, Spain and Ireland). Both Germany and the Netherlands will issue 2-3Y bonds. 
  
  
• We do not expect this to cause much pressure at the short end of core curves. EUR 15bn of a Schatz expiring at the end of next week will provide liquidity to markets.