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BONDS: EGBs-GILTS CASH CLOSE: Mid-Session Core FI Gains Fade

BONDS
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Periphery/semi-core EGB spreads tightened with Bund and Gilt yields rising Tuesday.

  • The declaration of martial law in South Korea spurred a risk-off rally in global safe-haven instruments, seeing Bund and Gilt yields touch session lows.
  • The move fully reversed by the cash close however as the South Korean assembly voted to lift martial law, while US job openings data proved a little more positive than expected.
  • 10Y Gilts hit a post-Oct 23 low (4.19%) before closing higher; Bunds likewise, after hitting a post-Oct 1 low (2.029%). The German curve bear flattened with the UK's bear steepening, with Gilts underperforming overall.
  • Periphery/semi-core EGBs outperformed core counterparts throughout, as equities strengthened.
  • OATs in particular were early outperformers, ahead of Wednesday's no-confidence vote - after the cash close, French President Macron expressed confidence that the government can survive the vote.
  • Apart from the French vote Wednesday, attention will be on final Nov Services PMIs (first and final for Italy and Spain), Eurozone PPI, and appearances by ECB's Lagarde and BOE's Bailey.

Closing Yields / 10-Yr EGB Spreads To Germany

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Periphery/semi-core EGB spreads tightened with Bund and Gilt yields rising Tuesday.

  • The declaration of martial law in South Korea spurred a risk-off rally in global safe-haven instruments, seeing Bund and Gilt yields touch session lows.
  • The move fully reversed by the cash close however as the South Korean assembly voted to lift martial law, while US job openings data proved a little more positive than expected.
  • 10Y Gilts hit a post-Oct 23 low (4.19%) before closing higher; Bunds likewise, after hitting a post-Oct 1 low (2.029%). The German curve bear flattened with the UK's bear steepening, with Gilts underperforming overall.
  • Periphery/semi-core EGBs outperformed core counterparts throughout, as equities strengthened.
  • OATs in particular were early outperformers, ahead of Wednesday's no-confidence vote - after the cash close, French President Macron expressed confidence that the government can survive the vote.
  • Apart from the French vote Wednesday, attention will be on final Nov Services PMIs (first and final for Italy and Spain), Eurozone PPI, and appearances by ECB's Lagarde and BOE's Bailey.

Closing Yields / 10-Yr EGB Spreads To Germany

Keep reading...Show less