BONDS: EGBs-GILTS CASH CLOSE: Gilts Extend Underperformance With Event Risk Eyed

Gilts underperformed again Tuesday, ahead of major global event risk the next couple of sessions.

• Today's US election and Thursday's multitude of central bank decisions (including the BoE and Fed) have set a bearish backdrop for core European FI so far this week, with Gilts continuing to reel from last week's UK fiscal announcement.
• Today saw weak demand at the 10Y Gilt auction, underlining the negative sentiment. A strong US ISM Services number saw Gilt weakness extent, with selling continuing into the close. The belly of the UK curve underperformed on the day, with 5Y yields up 10bp.
• Gilt underperformance to Bunds continued: 10Y spread up 4+bp today to a fresh post-Oct 2022 high of 210bp.
• As with Monday, German yields traded largely within last week's ranges, with some bear flattening seen in today's trade. Periphery EGB spreads narrowed for the session, tracking a bounce in equities, after having widened early.
• After hours we hear from ECB's Schnabel. All attention overnight will be on the US election outcome. Early Wednesday we get German factory orders data and final Services PMIs for the Eurozone, in addition to multiple ECB speakers.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

• Germany: The 2-Yr yield is up 3.9bps at 2.303%, 5-Yr is up 3.4bps at 2.292%, 10-Yr is up 3bps at 2.425%, and 30-Yr is up 2.7bps at 2.609%.
• UK: The 2-Yr yield is up 7.8bps at 4.513%, 5-Yr is up 10bps at 4.434%, 10-Yr is up 7.2bps at 4.53%, and 30-Yr is up 3.4bps at 4.958%.
• Italian BTP spread down 2.6bps at 124.6bps  / Spanish down 0.5bps at 70.3bps