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BONDS: EGBs-GILTS CASH CLOSE: OATs Give Up Early Outperformance On Geopolitics

BONDS
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European bonds rallied sharply Tuesday, with geopolitical concerns driving a safe-haven bid later in the session.

  • Core FI and periphery EGBs alike enjoyed gains in the morning, led by OATs on reports of forthcoming French fiscal tightening measures.
  • OATs would give up some of their gains later in the day after French PM Barnier failed to follow up with policy specifics - 10Y to Bund -2.1bp on the day, vs -5.2bp at the intraday tights.
  • Global core FI soared in mid-afternoon trade with risk spreads widening as Iran launched missiles at Israel.
  • Data was not a market mover: Eurozone September flash inflation had been anticipated after national-level data already released; manufacturing PMI data from Italy (below-consensus) and Spain (above-consensus) likewise failed to move the needle.
  • The German and UK curves both bull flattened. Periphery EGB spreads closed mixed, but little changed overall.
  • Wednesday's calendar includes Eurozone labour market data and several ECB speakers including Schnabel and Lane, as well as the record of the September BoE FPC meeting.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

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European bonds rallied sharply Tuesday, with geopolitical concerns driving a safe-haven bid later in the session.

  • Core FI and periphery EGBs alike enjoyed gains in the morning, led by OATs on reports of forthcoming French fiscal tightening measures.
  • OATs would give up some of their gains later in the day after French PM Barnier failed to follow up with policy specifics - 10Y to Bund -2.1bp on the day, vs -5.2bp at the intraday tights.
  • Global core FI soared in mid-afternoon trade with risk spreads widening as Iran launched missiles at Israel.
  • Data was not a market mover: Eurozone September flash inflation had been anticipated after national-level data already released; manufacturing PMI data from Italy (below-consensus) and Spain (above-consensus) likewise failed to move the needle.
  • The German and UK curves both bull flattened. Periphery EGB spreads closed mixed, but little changed overall.
  • Wednesday's calendar includes Eurozone labour market data and several ECB speakers including Schnabel and Lane, as well as the record of the September BoE FPC meeting.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

Keep reading...Show less