BONDS: EGBs-GILTS CASH CLOSE: Gilts Maintain Underperforming Theme

European bonds traded mixed Monday with long-end Gilts underperforming, ahead of a sequence of key risk events this week.

• Treasuries led an early global bid for bonds, as the recent US election-related sell-off lost some steam amid a paring back of implied probability that Donald Trump will win the American presidency.
• However the session brought little impactful data or macro headlines, keeping instruments trading within last week's ranges. Gilts underperformed Bunds, with light bear steepening in the curve (vs German twist flattening), as last week's UK fiscal developments continued to weigh.
• 10Y Gilts now trade 206bp outside Bunds, a fresh closing wide post-Oct 2022 (which was also part of a fiscal-related move).
• Periphery EGBs traded mixed. with BTP and SPGB spreads modestly tighter.
• Tuesday brings French industrial production and Spanish labor market data, along with multiple ECB speakers. The main event is the US election, though its impact is more likely to be felt on European markets early Wednesday. Later in the week we get multiple central bank decisions including the BoE and the Fed on Thursday (25bp cuts almost unanimously expected in both cases). 

Closing Yields / 10-Yr Periphery EGB Spreads To Germany