EGB/Gilt: BoE Expected To Ratchet Up Fight Against Inflation

European government bonds have traded broadly firmer this morning, with the gilt curve twist flattening heading into the BoE meeting.

• The Bank of England is due up at midday (GMT) and is expected to deliver a 50bp hike as it ratchets up the fight against inflation.
• Yields at the short-end of the gilt curve have pushed higher while the longer end has firmed. The 2s30s spread has narrowed 8bp.
• German factory orders for June were a touch better than expected while still contracting on the month (-0.4% M/M vs -0.9% expected).
• Similar to gilts, the bund curve has twist flattened with the 2s30s spread narrowing 3bp.
• The OAT curve has shifted in the same manner and has flattened 3bp at the long end.
• BTPs have broadly firmed with the curve bull flattening. Cash yields are 1-3bp lower on the day.
• Following US House Speaker Nancy Pelosi's departure from Taiwan, China has proceeded to hold live-fire military drills near to the island. The Taiwanese defence ministry has further claimed that it's website was hit with a cyber attack.
• Supply this morning came from France (OATs, EUR5.998bn) and Spain (Oblis/Obli-Ei, EUR5.15bn).