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Being driven by external factors

GILTS
  • 10-year gilts are outperforming Bunds but underperform Treasuries, while 2-year gilts are moving in line with 2-year USTs and outperforming Schatz.
  • There have not been notable domestic drivers in the UK today, instead the gilt market is largely being pulled about by external factors - most notably inflation prints out of the Eurozone (particularly the German HICP print at 13:00BST).
  • We are now seeing the front-end gilt yields around 25bp below their peak of around a week ago while 5+ year gilt yields are around 20bp off their peaks.
  • There are further Eurozone inflation prints tomorrow as well as US PCE which could move the docket ahead of next week's Fed and BOE meetings.

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