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BONDS: EGBs-GILTS CASH CLOSE: Gilts Extend Slide In Another Bear Flattening Move

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UK yields rose sharply again Thursday as the implications of Wednesday's budget announcement continued to be digested.

  • Continued concern over the UK budget's inflationary and bond supply impacts weighed heavily on the UK curve, with the short end underperforming for a 2nd consecutive session as BoE cuts were further priced out.
  • Italian and French inflation were largely in line with expectations. But this merely confirmed that after Wednesday's upside surprise in Germany, that Eurozone-wide core HICP failed to decelerate in October, defying expectations coming into the week (flash core was 2.7% Y/Y, vs 2.6% exp. and unch from Sep).
  • Yields finished off highs but the damage was done in Gilts in particular.
  • The UK curve bear flattened sharply, with Germany's twist flattening. Periphery EGB spreads were mixed, closing off session wides.
  • The global focus Friday will be the US employment report, with final October Manufacturing PMIs also featuring.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

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UK yields rose sharply again Thursday as the implications of Wednesday's budget announcement continued to be digested.

  • Continued concern over the UK budget's inflationary and bond supply impacts weighed heavily on the UK curve, with the short end underperforming for a 2nd consecutive session as BoE cuts were further priced out.
  • Italian and French inflation were largely in line with expectations. But this merely confirmed that after Wednesday's upside surprise in Germany, that Eurozone-wide core HICP failed to decelerate in October, defying expectations coming into the week (flash core was 2.7% Y/Y, vs 2.6% exp. and unch from Sep).
  • Yields finished off highs but the damage was done in Gilts in particular.
  • The UK curve bear flattened sharply, with Germany's twist flattening. Periphery EGB spreads were mixed, closing off session wides.
  • The global focus Friday will be the US employment report, with final October Manufacturing PMIs also featuring.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

Keep reading...Show less