Brexit talks dominate EGB markets

Brexit headlines have been the major focus for the market today. UK Prime Minister Boris Johnson's statement that the UK is preparing for an Australia-style deal (which is little more than WTO rules) pushed core fixed income higher, but much of the knee jerk move was retraced as the market took the view that the talk was little move than posturing and hard talk. Macron later continued the hard talk saying that the UK needed a deal more than the EU but Merkel struck a more conciliatory tone stating that compromises would be needed from both sides. Johnson later said that unless the EU was willing to compromise talks would stop now, despite EU diplomats already on their way to the UK to continue talks and EU sources stating that talks would continue next week.

• Elsewhere, a better than expected US retail sales print pushed fixed income lower globally.
• Bund futures are up 0.24 today at 176.14 with 10y Bund yields down -1.8bp at -0.630% and Schatz yields down -0.8bp at -0.781%.
• BTP futures are up 0.67 today at 150.27 with 10y yields down -5.2bp at 0.644% and 2y yields down -4.6bp at -0.367%.
• OAT futures are up 0.29 today at 170.21 with 10y yields down -2.3bp at -0.355% and 2y yields down -1.1bp at -0.716%.